We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
U.S. stock markets fell sharply on Thursday following a spike in yields of U.S. government bonds. Market participants continue to weigh latest economic and earnings data. All the three major stock indexes ended in negative territory for three successive days.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.8% or 290.91 points to close at 34,474.83. Notably, 20 components of the 30-stock index ended in negative territory, while 10 in positive zone. The blue-chip index finished below its 50-day moving average for the first time since early June.
The tech-heavy Nasdaq Composite finished at 13,316.93, declining 1.2% or 157.70 points due to weak performance of large-cap technology stocks. The major loser of the tech-laden index was MercadoLibre Inc. (MELI - Free Report) . The stock price declined 4.1%. MercadoLibre currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 slid 0.8% to end at 4,370.36. 10 out of 11 broad sectors of the benchmark ended in negative territory. The Communication Services Select Sector SPDR (XLC), the Consumer Staples Select Sector SPDR (XLP), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) fell 1.2%, 1%, 1.7% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 1.9% to 16.78. A total of 11.2 billion shares were traded on Thursday, lower than the last 20-session average of 11 billion. The S&P 500 posted two new 52-week highs and 17 new 52-week lows. The Nasdaq Composite registered 25 new 52-week highs and 252 new 52-week lows.
Spike in Sovereign Bond Yields
The yield on the short-term 2-Year U.S. Treasury Note rose to 4.928%. This yield is closely linked to the movement of the Fed fund rate. The yield on the benchmark 10-Year U.S. Treasury Note touched 4.255%, its highest since October 2022. This link is closely associated with the mortgage rate. The yield on the long-term 30-Year U.S. Treasury Note closed at 4.367%.
The spike in the yields on U.S. government bonds came after the release of the Fed’s July FOMC minutes. Majority of Federal Reserve officials remained concerned that the general price level stayed elevated despite the central bank’s decision to adopt strict monetary control and aggressive interest rate hike policies in the last one and half years.
Consequently, the minutes indicate the possibility of more rate hikes in near future. At present, the Fed fund rate is in the range of 5.25-5.5%, marking the highest level in more than 22 years. However, the CME FedWatch currently shows that there exists more than 88% probability that the Fed will keep the benchmark lending rate unchanged in September FOMC meeting.
According to the minutes, “With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”
Per the minutes, “In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time.”
Economic Data
The Department of Labor reported that weekly jobless claims decreased by 11,000 to 239,000 for the week ended Aug 12, lagging marginally to the consensus estimate of 240,000. Previous week’s data was revised upward to 250,000 from 248,000 reported earlier.
Continuing claims — people who already received government unemployment benefit and run a week behind the headline number — came in at 1.716 million for the week ended Aug 5, an increase of 32,000 from the previous week.
The Conference Board reported that Leading Economic Index decline 0.4% in July to a reding of 105.8, in line with the consensus estimate. The metric declined 0.7% in June.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Stock Market News for Aug 18, 2023
U.S. stock markets fell sharply on Thursday following a spike in yields of U.S. government bonds. Market participants continue to weigh latest economic and earnings data. All the three major stock indexes ended in negative territory for three successive days.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.8% or 290.91 points to close at 34,474.83. Notably, 20 components of the 30-stock index ended in negative territory, while 10 in positive zone. The blue-chip index finished below its 50-day moving average for the first time since early June.
The tech-heavy Nasdaq Composite finished at 13,316.93, declining 1.2% or 157.70 points due to weak performance of large-cap technology stocks. The major loser of the tech-laden index was MercadoLibre Inc. (MELI - Free Report) . The stock price declined 4.1%. MercadoLibre currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 slid 0.8% to end at 4,370.36. 10 out of 11 broad sectors of the benchmark ended in negative territory. The Communication Services Select Sector SPDR (XLC), the Consumer Staples Select Sector SPDR (XLP), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) fell 1.2%, 1%, 1.7% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 1.9% to 16.78. A total of 11.2 billion shares were traded on Thursday, lower than the last 20-session average of 11 billion. The S&P 500 posted two new 52-week highs and 17 new 52-week lows. The Nasdaq Composite registered 25 new 52-week highs and 252 new 52-week lows.
Spike in Sovereign Bond Yields
The yield on the short-term 2-Year U.S. Treasury Note rose to 4.928%. This yield is closely linked to the movement of the Fed fund rate. The yield on the benchmark 10-Year U.S. Treasury Note touched 4.255%, its highest since October 2022. This link is closely associated with the mortgage rate. The yield on the long-term 30-Year U.S. Treasury Note closed at 4.367%.
The spike in the yields on U.S. government bonds came after the release of the Fed’s July FOMC minutes. Majority of Federal Reserve officials remained concerned that the general price level stayed elevated despite the central bank’s decision to adopt strict monetary control and aggressive interest rate hike policies in the last one and half years.
Consequently, the minutes indicate the possibility of more rate hikes in near future. At present, the Fed fund rate is in the range of 5.25-5.5%, marking the highest level in more than 22 years. However, the CME FedWatch currently shows that there exists more than 88% probability that the Fed will keep the benchmark lending rate unchanged in September FOMC meeting.
According to the minutes, “With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”
Per the minutes, “In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time.”
Economic Data
The Department of Labor reported that weekly jobless claims decreased by 11,000 to 239,000 for the week ended Aug 12, lagging marginally to the consensus estimate of 240,000. Previous week’s data was revised upward to 250,000 from 248,000 reported earlier.
Continuing claims — people who already received government unemployment benefit and run a week behind the headline number — came in at 1.716 million for the week ended Aug 5, an increase of 32,000 from the previous week.
The Conference Board reported that Leading Economic Index decline 0.4% in July to a reding of 105.8, in line with the consensus estimate. The metric declined 0.7% in June.