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MARKETS LIVE BLOG:

S&P 500, NASDAQ BUILD ON RECORDS AS U.S. JOBS DATA FUEL BETS FOR SEPT. RATE CUT

Bitcoin slides as the stock market reaches higher

Stock Market News for Aug 24, 2022

Zacks Equity Research
·4 min read

Wall Street closed slightly lower on Tuesday, bracing for a hawkish message from the Fed meet scheduled at Jackson Hole. Economic data showed that private sector business activity contracted for the second straight month. All the three major stock indexes ended slightly in the red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) dropped 0.5% or 154.02 points, to close at 32,909.59. Twenty-one components of the 30-stock index ended in the negative territory and eight ended in the positive, while one remained unchanged.

The tech-heavy Nasdaq Composite fell marginally by 0.27 points to 12,381.30.

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The S&P 500 slid 0.2% or 9.26 points to end at 4,128.73. Seven of the 11 broad sectors of the benchmark index closed in the red. The Real Estate Select Sector SPDR (XLRE), the Health Care Select Sector SPDR (XLV) and the Communication Services Select Sector SPDR (XLC) tanked 1.5%, 1.4% and 0.9%, respectively, while the Energy Select Sector SPDR (XLE) surged 3.6%. Crude oil prices jumped more than 3% on Tuesday. Consequently, shares of Halliburton Company HAL and Occidental Petroleum Corporation OXY surged 7% and 6.9%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The fear-gauge CBOE Volatility Index (VIX) increased 1.3% to 24.11. A total of 9.4 billion shares were traded Tuesday, lower than the last 20-session average of 10.9 billion. Decliners outnumbered advancers on the NYSE by a 1.09-to-1 ratio. On the Nasdaq, a 1.03-to-1 ratio favored the advancing issues.

Upcoming Jackson Hole Fed Meet Keeps Wall Street Apprehensive

Market participants have remained apprehensive about the annual Jackson Hole Symposium of the Fed in Wyoming to be held later this week. Stocks have declined as it is widely believed that the Fed would commit to further tightening of monetary policy to control inflation. Fed Chair Jerome Powell's speech remains the focus to get a hang on how aggressive the Fed is likely to be. Investors are not ruling out a 75-basis-point hike in the September meet.

The 10-year Treasury Yield Rises to Highest Level Since July

The yield on the benchmark 10-year Treasury note remained above 3% on Tuesday as investors monitored weaker-than-expected housing and PMI data, and weighed in expectations from the Jackson Hole economic symposium later in the week. The 10-year Treasury yield rose 3 basis points to 3.065%, keeping its head above the 3% level, having surpassed it for the first time in a month on Monday. Yields move inversely to prices.

Higher interest rates have an adverse effect on large-cap growth stocks like technology because they reduce the relative value of earnings from these players.

Private Sector Activity Contracts for Second Straight Month

Private sector business activity in the United States contracted for the second straight month in August to its lowest level in 27 months, with data from the services sector coming in particularly weak as demand weakened. The S&P Global purchasing managers index (PMI) for August dropped to 45 this month, the lowest since May 2020, from 47.7 in July.

The service sector PMI dropped to 44.1 from 47.3 last month. According to the report, material shortages, delivery delays, hikes in interest rates and strong inflationary pressures all served to dampen customer demand. This is in line with what the Federal Reserve is trying to achieve by its string of interest rate increases. With inflation running near a 40-year high, it has pushed up rates from near zero in March to their current range of 2.25% to 2.50% while indicating further planned hikes.

Economic Data

The U.S. Census Bureau and Department of Housing and Urban Development jointly reported that the sales numbers of new single-family houses in July 2022 had come in at a seasonally adjusted annual rate of 511,000, compared to an estimate of 586,000 for the period. This is 12.6% below the revised June rate of 585,000.


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