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Wall Street ended sharply lower on Thursday, dragged down by the technology sector. Investors remained nervous about what to expect from Fed Chair Jerome Powell’s Jackson Hole speech. All three major indexes ended firmly in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 1.1% or 373.56 points to close at 34,099.42. Twenty-four components of the 30-stock index ended in negative territory, while six ended in positive.
The S&P 500 fell 1.4%, or 59.7 points, to close at 4,376.31. All 11 broad sectors of the benchmark index ended in negative territory. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY) and the Communication Services Select Sector SPDR (XLC) receded 2.3%, 2% and 1.9%, respectively.
The tech-heavy Nasdaq lost 1.9%, or 257.06 points to close at 13,463.97.
The fear-gauge CBOE Volatility Index (VIX) was up 7.6% at 17.20. A total of 10 billion shares were traded on Thursday, lower than the last 20-session average of 10.9 billion. Decliners outnumbered advancers on the NYSE by a 2.95-to-1 ratio. On the Nasdaq, a 2.61-to-1 ratio favored declining issues.
Investors Remain Cautious About Powell’s Upcoming Speech
The Federal Reserve has been raising rates since March 2022 in an effort to bring down inflation, and is yet to officially bring an end to it. In an environment where inflation has been falling and the economy is slowing down, investors are looking for clarity on whether more rate increases are ahead and how long the Fed plans to hold rates high.
They are eagerly waiting to hear from Fed Chair Jerome Powell, who will be giving a speech this Friday at the Economic Symposium in Jackson Hole. Investors are hoping that the Fed chief would allay market fears by providing an optimistic outlook for the months to come. However, two important Fed officials, on Thursday, welcomed the recent jump seen in treasury yields. They believe this would go a long way in slowing down the economy, and help the Fed achieve its 2% target rate for inflation.
Philadelphia Fed President Patrick Harker and Boston Fed President Susan Collins, in separate interviews at Jackson Hole, laid out their outlooks for monetary policy and the economy. Both agreed that the rise in long-term borrowing costs was in line with the Fed’s target of slowing the economy down. Their comments did little to improve investor mood, as they were looking for more dovish statements ahead of Powell’s speech. This brought an abrupt halt to the NVIDIA-led tech rally, and technology became the biggest losing sector of the day. Mega-cap growth stocks like tech usually suffer when the economic outlook is grim.
The Labor Department said on Thursday that initial jobless claims fell to 230,000, decreasing 10,000 for the week ending Aug 19, from the previous week. The previous week's level was revised up by 1,000 from 239,000 to 240,000. The four-week moving average increased to 236,500, marking a rise of 2,250 from the previous week. The previous week's average was revised up by 250 to 234,500.
Continuing claims came in at 1,702,000 for the week ending Aug 12, decreasing 9,000 from the previous week’s revised level. The previous week's numbers were revised down by 5,000 from 1,716,000 to 1,711,000. The 4-week moving average came in at 1,697,250, an increase of 5,750 from the previous week's revised average. The previous week's average was revised down by 1,250 from 1,692,750 to 1,691,500.
The U.S. Census Bureau reported that new orders for manufactured durable goods decreased 5.2% in July, following four consecutive monthly increases. The number for June was revised down to an increase of 4.4% from the previously reported 4.7%.
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Stock Market News for Aug 25, 2023
Wall Street ended sharply lower on Thursday, dragged down by the technology sector. Investors remained nervous about what to expect from Fed Chair Jerome Powell’s Jackson Hole speech. All three major indexes ended firmly in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 1.1% or 373.56 points to close at 34,099.42. Twenty-four components of the 30-stock index ended in negative territory, while six ended in positive.
The S&P 500 fell 1.4%, or 59.7 points, to close at 4,376.31. All 11 broad sectors of the benchmark index ended in negative territory. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY) and the Communication Services Select Sector SPDR (XLC) receded 2.3%, 2% and 1.9%, respectively.
The tech-heavy Nasdaq lost 1.9%, or 257.06 points to close at 13,463.97.
The fear-gauge CBOE Volatility Index (VIX) was up 7.6% at 17.20. A total of 10 billion shares were traded on Thursday, lower than the last 20-session average of 10.9 billion. Decliners outnumbered advancers on the NYSE by a 2.95-to-1 ratio. On the Nasdaq, a 2.61-to-1 ratio favored declining issues.
Investors Remain Cautious About Powell’s Upcoming Speech
The Federal Reserve has been raising rates since March 2022 in an effort to bring down inflation, and is yet to officially bring an end to it. In an environment where inflation has been falling and the economy is slowing down, investors are looking for clarity on whether more rate increases are ahead and how long the Fed plans to hold rates high.
They are eagerly waiting to hear from Fed Chair Jerome Powell, who will be giving a speech this Friday at the Economic Symposium in Jackson Hole. Investors are hoping that the Fed chief would allay market fears by providing an optimistic outlook for the months to come. However, two important Fed officials, on Thursday, welcomed the recent jump seen in treasury yields. They believe this would go a long way in slowing down the economy, and help the Fed achieve its 2% target rate for inflation.
Philadelphia Fed President Patrick Harker and Boston Fed President Susan Collins, in separate interviews at Jackson Hole, laid out their outlooks for monetary policy and the economy. Both agreed that the rise in long-term borrowing costs was in line with the Fed’s target of slowing the economy down. Their comments did little to improve investor mood, as they were looking for more dovish statements ahead of Powell’s speech. This brought an abrupt halt to the NVIDIA-led tech rally, and technology became the biggest losing sector of the day. Mega-cap growth stocks like tech usually suffer when the economic outlook is grim.
Consequently, shares of Advanced Micro Devices, Inc. (AMD - Free Report) and Netflix, Inc. (NFLX - Free Report) lost 7% and 4.8%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Labor Department said on Thursday that initial jobless claims fell to 230,000, decreasing 10,000 for the week ending Aug 19, from the previous week. The previous week's level was revised up by 1,000 from 239,000 to 240,000. The four-week moving average increased to 236,500, marking a rise of 2,250 from the previous week. The previous week's average was revised up by 250 to 234,500.
Continuing claims came in at 1,702,000 for the week ending Aug 12, decreasing 9,000 from the previous week’s revised level. The previous week's numbers were revised down by 5,000 from 1,716,000 to 1,711,000. The 4-week moving average came in at 1,697,250, an increase of 5,750 from the previous week's revised average. The previous week's average was revised down by 1,250 from 1,692,750 to 1,691,500.
The U.S. Census Bureau reported that new orders for manufactured durable goods decreased 5.2% in July, following four consecutive monthly increases. The number for June was revised down to an increase of 4.4% from the previously reported 4.7%.