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U.S. stocks ended sharply lower on Friday, with all the three major indexes declining more than 3% each to record their worst daily percentage decline since May after Fed Chair Jerome Powell said that the central bank would continue to hike interest rates till it manages to fully control inflation. This dashed the hopes of investors who were expecting the Fed to go for a less steep rate hike in its next meeting.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) plummeted 3% or 1,008.38 points to end at 32,283.40 points, registering its worst daily percentage decline since May 18.
The S&P 500 declined 3.4% or 141.46 points to close at 4,057.66 points, to record its largest percentage drop since Jun 13. Consumer discretionary and industrial stocks were the worst performers.
The Consumer Discretionary Select Sector SPDR (XLY) plunged 3.8%, while the Industrials Select Sector SPDR (XLC) declined 3.5%. All of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq tanked 3.9% or 497.56 points to finish at 12,141.71 points.
The fear-gauge CBOE Volatility Index (VIX) was up 17.4% to 25.56, recording its highest close in six weeks. A total of 10.37 billion shares were traded on Friday, lower than the last 20-session average of 10.64 billion.
Hopes of Lower Interest Rate Hike Dashed
Friday saw a bloodbath in the markets, with all the three major indexes declining more than 3%, led by the tech-heavy Nasdaq after Fed Chair Jerome Powell dashed all hopes of a less aggressive rate hike stance in its upcoming meeting. Powell in his speech insisted that the Fed would continue its fight against so long it doesn’t completely tame it.
He insisted that for getting a firm grip on soaring inflation, sharp rate hikes might cause some near-term pain for the Americans but the Fed would still go ahead with its plans. Investors had been expecting the Fed might be less aggressive in its rate hike in its upcoming September meeting but Powell’s remarks were more hawkish than expected.
Investors knew that more rate hikes were in the coming but they were divided between a 75-basis-point and 50-basis-point hike in Fed upcoming meeting. A 75-basis-point hike is now almost expected now.
Following Powell’s speech, the CBOE Volatility Index (VIX) jumped 3.78 points to 25.56, registering its highest close in six weeks.
Friday’s decline was broad-based, with only five stocks in the S&P 500 managing to close in the green.
Economic Data
Ahead of Powell’s speech on Friday, a batch of important economic data was released. The Personal Consumption Expenditure or PCE index, Fed’s preferred inflation gauge, declined 0.1% in July and 6.3% from 6.8% on a year-over-year basis. Core PCE, which excludes the highly volatile food and energy prices, edged lower to 4.6% from 4.8% and also came in lower than expectations of 4.7%.
In other economic data, personal income increased 0.2% in July. Consumer spending increased 0.1%.
Weekly Roundup
It was a bad week for markets, with the S&P 500 giving up all its gains for August. For the week, the S&P 500 shed 4%. The Dow declined 4.2% for the week, while the Nasdaq closed the week 4.4% lower.
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Stock Market News for Aug 29, 2022
U.S. stocks ended sharply lower on Friday, with all the three major indexes declining more than 3% each to record their worst daily percentage decline since May after Fed Chair Jerome Powell said that the central bank would continue to hike interest rates till it manages to fully control inflation. This dashed the hopes of investors who were expecting the Fed to go for a less steep rate hike in its next meeting.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) plummeted 3% or 1,008.38 points to end at 32,283.40 points, registering its worst daily percentage decline since May 18.
The S&P 500 declined 3.4% or 141.46 points to close at 4,057.66 points, to record its largest percentage drop since Jun 13. Consumer discretionary and industrial stocks were the worst performers.
The Consumer Discretionary Select Sector SPDR (XLY) plunged 3.8%, while the Industrials Select Sector SPDR (XLC) declined 3.5%. All of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq tanked 3.9% or 497.56 points to finish at 12,141.71 points.
The fear-gauge CBOE Volatility Index (VIX) was up 17.4% to 25.56, recording its highest close in six weeks. A total of 10.37 billion shares were traded on Friday, lower than the last 20-session average of 10.64 billion.
Hopes of Lower Interest Rate Hike Dashed
Friday saw a bloodbath in the markets, with all the three major indexes declining more than 3%, led by the tech-heavy Nasdaq after Fed Chair Jerome Powell dashed all hopes of a less aggressive rate hike stance in its upcoming meeting. Powell in his speech insisted that the Fed would continue its fight against so long it doesn’t completely tame it.
He insisted that for getting a firm grip on soaring inflation, sharp rate hikes might cause some near-term pain for the Americans but the Fed would still go ahead with its plans. Investors had been expecting the Fed might be less aggressive in its rate hike in its upcoming September meeting but Powell’s remarks were more hawkish than expected.
Investors knew that more rate hikes were in the coming but they were divided between a 75-basis-point and 50-basis-point hike in Fed upcoming meeting. A 75-basis-point hike is now almost expected now.
Following Powell’s speech, the CBOE Volatility Index (VIX) jumped 3.78 points to 25.56, registering its highest close in six weeks.
The 10-year Treasury yield also rose on Friday as a result of which the high-growth tech stocks suffered the most. Shares of NVIDIA Corporation (NVDA - Free Report) and Amazon.com, Inc. (AMZN - Free Report) each plummeted 9.2%, while Meta Platforms, Inc. (META - Free Report) declined 4.2%. Amazon has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Friday’s decline was broad-based, with only five stocks in the S&P 500 managing to close in the green.
Economic Data
Ahead of Powell’s speech on Friday, a batch of important economic data was released. The Personal Consumption Expenditure or PCE index, Fed’s preferred inflation gauge, declined 0.1% in July and 6.3% from 6.8% on a year-over-year basis. Core PCE, which excludes the highly volatile food and energy prices, edged lower to 4.6% from 4.8% and also came in lower than expectations of 4.7%.
In other economic data, personal income increased 0.2% in July. Consumer spending increased 0.1%.
Weekly Roundup
It was a bad week for markets, with the S&P 500 giving up all its gains for August. For the week, the S&P 500 shed 4%. The Dow declined 4.2% for the week, while the Nasdaq closed the week 4.4% lower.