After logging their best month since 2020, the U.S. stock indexes started the month of August on a down note.
While earnings season rambles on, the broader economy is clearly on shakier ground than it was at the start of the year. Notably, gross domestic product or GDP has now registered two consecutive quarters of contraction. According to many market followers, this signals that the United States is now in a technical recession. On top of this, the Bureau of Economic Analysis announced on Friday that the personal consumption expenditures price index was up 6.8% in June, marking its largest 12-month advance since January of 1982. At its Federal Open Market Committee meeting last week, the Federal Reserve increased its overnight lending rate by another three-quarters of a percentage point. With inflation still running well above the lead bank’s target, it’s clear that additional increases will be necessary in the remainder of the year.
This week’s labor market report due out Friday may give some indication of what the Fed’s next move might be in September. The current consensus estimates that 250,000 positions were added in June, down from 372,000 in July. Other economic reports of interest this week include the Institute for Supply Management’s July index for the services economy, where a modest deceleration is expected from June’s reading of 55.3%. (Figures above 50% indicate expansion, while those below 50% suggest contraction.) Wednesday also brings factory orders for June, where a slowdown is also likely.
Summing up Monday’s results, the Dow Jones Industrial Average closed down 46 points, while the broadly diversified S&P 500 lost 11 points. Meanwhile, the tech-heavy NASDAQ composite shed 21 points. Breaking it down by sectors, decliners outnumbered advancers by a small margin, led by energy stocks which fell 2.2%. In the plus column, consumer staples led with a gain of 1.21%. Elsewhere, oil prices fell, with West Texas Intermediate slipping 5%, to just below $94.00 a barrel.
As we look toward a new day, U.S. stock futures are pointing to a negative open. Elsewhere, Asian markets were mostly down overnight, while stocks in Europe are slightly in the red. Meanwhile, oil futures are up half a percentage point, at around $94.35 a barrel.
– Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
