Wall Street’s main indexes continued to be mixed in Tuesday’s trade, with caution lingering today as concerns persisted over the Federal Reserve’s planned interest rate hikes to curb inflation.
Indices fell for a second session in a row yesterday, fueling concerns about the sustainability of the recent rally that sent the market up more than 17% from June lows. The rally was fueled by strong corporate results and hopes for a more dovish stance by the Fed on policy tightening in the coming months.
In recent days, however, concerns about inflation and the Fed’s next moves have rekindled, with several analysts estimating that the central bank will raise interest rates by 75 basis points in September, for a third consecutive meeting, despite the risk of lead to a recession in the economy.
Investors await speeches by central tables at the Fed’s annual conference in Jackson Hole, Wyoming. The conference starts on Thursday, but the big event will be Fed Chairman Jerome Powell’s speech on Friday. Analysts expect Powell to use his much-anticipated speech to emphasize that the central bank will drive inflation to its 2% target even if it means a recession for the economy.
Expectations that the Fed will maintain an aggressive stance to rein in inflation have also pushed the US 10-year yield back above the 3% level, while the US dollar continues to strengthen against its rivals.
Indicators – Statistics
On the board, the Dow Jones lost 121.89 points, or -0.37%, to 32,934.41, while the S&P 500 fell 2.92 points, or -0.07%, to 4,135.07. The tech Nasdaq added 21.62 points, or 0.15%, to 12,400.67.
Of the 30 stocks that make up the Dow Jones industrial index, 12 move with a positive sign and 18 with a negative sign. The biggest increase was recorded by Chevron with gains of $4.77 or 3.04% to $161.67, followed by Caterpillar at $197.07 with an increase of 2.77% and the Dow with gains of 1.78% at $55.38
The biggest losers are Procter & Gamble (-1.94%), UnitedHealth Group (-1.74%) and Home Depot (-1.70%).
Later in the day, data from S&P Global today showed that US business activity slowed further in August, with the index sliding to its lowest level since May 2020.
In particular, the composite PMI, which combines manufacturing and services, fell to 45.0 in August from 47.7 in July, according to preliminary data from S&P Global. Readings below 50 indicate a contraction in business activity.
Meanwhile, data from S&P Global showed that the index for business activity in services fell to a 27-month low of 44.1 points from 47.3 points in July, while the manufacturing index fell to a 25-month low of 51.3 points from 52.2 points in the previous month.
Sales of newly built single-family homes also plunged in July as high mortgage rates and increased home prices continue to weigh on consumer purchasing power.
In particular, new sales fell 12.6% to a seasonally adjusted 511,000 units last month, as announced by the US Commerce Department. The average estimate of analysts in a Reuters poll had put new sales at 575,000 units.
Source: Capital
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