Today’s news of a second straight month of a contraction in business activity plus growing fears of a Fed announcement this Friday of another ¾ point rate hike has kept the market spooked with a third consecutive session of losses, particularly with the Dow plunging another 154 points.  Growth fared better than value with the Philadelphia tech index rising 0.7% and the Nasdaq closing at break-even and being up over a hundred points in the morning while the Dow and S&P were in the red almost all day.  Ordinarily this would indicate “risk on” but not today as reflected in the still very thin volume of 9.4 billion as investors stay on the sidelines waiting for Friday. 

Tue  August 23, 2022  4:17 PM

Wall Street ends down as investors eye slowing economy

By Noel Randewich and Bansari Mayur Kamdar

DJ: 33,063.61  -643.13        NAS: 12,381.57  -323.64       S&P: 4,137.99  -90.49      8/22

DJ: 32,909.59  -154.02        NAS: 12,381.30  -0.27           S&P: 4,128.73  -9.26        8/23

Aug 23 (Reuters) - Wall Street ended down on Tuesday as investors focused on data showing a slowing economy ahead of a U.S. Federal Reserve gathering later this week in Jackson Hole, Wyoming.  The S&P 500 dipped after data showed private-sector business activity in the United States contracted for a second straight month in August, with particular softness in the services sector as demand weakened in the face of inflation and tighter financial conditions. read more  The S&P Global flash composite purchasing managers index, or PMI, for August dropped to 45, the lowest since February 2021, from 47.7 in July. A reading below 50 indicates a contraction in activity.

Stocks have declined in recent sessions ahead of this week's central bank gathering in Jackson Hole, where Fed Chair Jerome Powell is expected on Friday to reinforce a strong commitment to stamp out inflation running at four-decades high.  Traders are split between expecting a 50 basis points hike and a 75 bps hike by the central bank after several policymakers recently pushed back against expectations of a dovish pivot and emphasized the Fed's commitment to fight against inflation. FEDWATCH  "What we have seen in the past week is the realization that the Fed could still raise interest rates by 75 basis points in September," said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma. "The market fears that Powell's going to go back into a hawkish stance."

The benchmark 10-year yield rose to its highest level since late July.

Zoom Video Communications Inc (ZM.O) tumbled almost 17% after the former "stay-at-home" stock darling cut its annual profit and revenue forecasts. read more  Of the 11 S&P 500 sector indexes, seven declined, led lower by real estate (.SPLRCR), down 1.46%, followed by a 1.39% loss in healthcare  (.SPXHC).

After a rough start to the year, markets rallied since mid-June on hopes inflation has peaked, but that summer rally snapped last week due to renewed fears around an aggressive monetary policy tightening path by the Fed. 

The S&P 500 declined 0.22% to end the session at 4,128.73 points.  The Nasdaq was unchanged at 12,381.30 points, while the Dow Jones Industrial Average declined 0.47% to 32,909.59 points.  The S&P 500 energy index (.SPNY) rallied 3.6%, tracking a jump in crude prices as tight supply moved back into focus.

Macy's Inc (M.N) rose 3.8% after the retailer beat quarterly profit estimates, while Palo Alto Networks Inc (PANW.O) surged about 12% after the cybersecurity firm posted upbeat quarterly results and announced a stock split plan. read more  The Philadelphia Semiconductor Index (.SOX) rose 0.7%, reducing its loss in 2022 to about 27%. 

 

Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) by a 1.5-to-one ratio.  The S&P 500 posted one new high and 30 new lows; the Nasdaq recorded 45 new highs and 150 new lows.

Volume on U.S. exchanges was relatively light, with 9.4 billion shares traded, compared with an average of 10.9 billion shares over the previous 20 sessions.