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Wall Street ended slightly lower on Tuesday, dragged down by the financial sector. The 10-year treasury yield almost touched a 16-year high. Two of the three major indexes ended in the red, while one remained virtually unchanged.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.5% or 174.86 points to close at 34,288.83. Twenty components of the 30-stock index ended in negative territory, while 10 ended in positive.
The S&P 500 dropped 0.3%, or 12.22 points, to close at 4,387.55. Seven out of the 11 broad sectors of the benchmark index ended in negative territory. The Financials Select Sector SPDR (XLF), the Energy Select Sector SPDR (XLE) and the Consumer Staples Select Sector SPDR (XLP) receded 0.9%, 0.8% and 0.6%, respectively, while the Real Estate Select Sector SPDR (XLRE) added 0.3%.
The tech-heavy Nasdaq remained virtually unchanged at 13,505.87, adding 8.3 points or less than 0.1%.
The fear-gauge CBOE Volatility Index (VIX) was down 0.9% at 16.97. A total of 9.4 billion shares were traded on Tuesday, lower than the last 20-session average of 11 billion. Decliners outnumbered advancers on the NYSE by a 1.43-to-1 ratio. Also on the Nasdaq, a 1.43-to-1 ratio favored declining issues.
Bank Stocks Weigh Down on the Market
On Monday, S&P Global followed Moody’s to become the second rating agency to cut the credit ratings on some regional banks with high commercial real estate exposure. For a regional banking sector trying to recover from a crisis earlier this year, this adverse rating revision will make borrowing more costly.
Wall Street felt the heat arising from this decision as stocks of various U.S. regional banks fell, dragging the market with them. The SPDR S&P Regional Banking ETF (KRE - Free Report) slid 2.9%, while the broader financial market also slumped. Even as the S&P did not cut ratings of mega-cap banks, stocks of banking sector behemoths like JPMorgan Chase & Co. (JPM - Free Report) and Bank of America Corporation (BAC - Free Report) fell 2.1% and 2.4%, respectively. JPMorgan carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
10-Year Treasury Yield Almost Touches 16-Year High
U.S. Treasuries have hogged the limelight once again, with the benchmark 10-year yield climbing to 4.366% on Tuesday, its highest level since 2007 and up almost 40 bps month to date. However, by the end of the session, it lost some steam to close to 4.318%.
The rise in yields, which move inversely to share prices, comes on the back of upbeat economic numbers that have prompted investors to lessen expectations for the Federal Reserve to ease its monetary policy. And in such an event, a soft-landing of the economy seems less and less likely. Concerns about the Chinese economy have also not helped, and yields have been on the rise in recent sessions.
Usually, when long-term treasury yields rise and an economic slowdown is projected for the near future, mega-cap growth stocks bear the brunt as their current valuation seems over-estimated with respect to their prospects. Investors abandon these speculative stocks and rush to the safety of the bond market. This does not bode well for Wall Street. Investors, however, eagerly await Fed Chair Jerome Powell’s Jackson Hole Speech, for direction about the Fed’s policies going forward.
Economic Data
Per the National Association of Realtors, existing home sales fell 2.2% in July to a seasonally adjusted annual rate of 4.07 million. In June, the number had come in at 4.16 million.
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Stock Market News for Aug 23, 2023
Wall Street ended slightly lower on Tuesday, dragged down by the financial sector. The 10-year treasury yield almost touched a 16-year high. Two of the three major indexes ended in the red, while one remained virtually unchanged.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.5% or 174.86 points to close at 34,288.83. Twenty components of the 30-stock index ended in negative territory, while 10 ended in positive.
The S&P 500 dropped 0.3%, or 12.22 points, to close at 4,387.55. Seven out of the 11 broad sectors of the benchmark index ended in negative territory. The Financials Select Sector SPDR (XLF), the Energy Select Sector SPDR (XLE) and the Consumer Staples Select Sector SPDR (XLP) receded 0.9%, 0.8% and 0.6%, respectively, while the Real Estate Select Sector SPDR (XLRE) added 0.3%.
The tech-heavy Nasdaq remained virtually unchanged at 13,505.87, adding 8.3 points or less than 0.1%.
The fear-gauge CBOE Volatility Index (VIX) was down 0.9% at 16.97. A total of 9.4 billion shares were traded on Tuesday, lower than the last 20-session average of 11 billion. Decliners outnumbered advancers on the NYSE by a 1.43-to-1 ratio. Also on the Nasdaq, a 1.43-to-1 ratio favored declining issues.
Bank Stocks Weigh Down on the Market
On Monday, S&P Global followed Moody’s to become the second rating agency to cut the credit ratings on some regional banks with high commercial real estate exposure. For a regional banking sector trying to recover from a crisis earlier this year, this adverse rating revision will make borrowing more costly.
Wall Street felt the heat arising from this decision as stocks of various U.S. regional banks fell, dragging the market with them. The SPDR S&P Regional Banking ETF (KRE - Free Report) slid 2.9%, while the broader financial market also slumped. Even as the S&P did not cut ratings of mega-cap banks, stocks of banking sector behemoths like JPMorgan Chase & Co. (JPM - Free Report) and Bank of America Corporation (BAC - Free Report) fell 2.1% and 2.4%, respectively. JPMorgan carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
10-Year Treasury Yield Almost Touches 16-Year High
U.S. Treasuries have hogged the limelight once again, with the benchmark 10-year yield climbing to 4.366% on Tuesday, its highest level since 2007 and up almost 40 bps month to date. However, by the end of the session, it lost some steam to close to 4.318%.
The rise in yields, which move inversely to share prices, comes on the back of upbeat economic numbers that have prompted investors to lessen expectations for the Federal Reserve to ease its monetary policy. And in such an event, a soft-landing of the economy seems less and less likely. Concerns about the Chinese economy have also not helped, and yields have been on the rise in recent sessions.
Usually, when long-term treasury yields rise and an economic slowdown is projected for the near future, mega-cap growth stocks bear the brunt as their current valuation seems over-estimated with respect to their prospects. Investors abandon these speculative stocks and rush to the safety of the bond market. This does not bode well for Wall Street. Investors, however, eagerly await Fed Chair Jerome Powell’s Jackson Hole Speech, for direction about the Fed’s policies going forward.
Economic Data
Per the National Association of Realtors, existing home sales fell 2.2% in July to a seasonally adjusted annual rate of 4.07 million. In June, the number had come in at 4.16 million.