Stocks took a beating on Monday, posting their worst day since mid-June.
The Dow Jones Industrial Average slid 643 points (1.9%), while the S&P 500 shed 90 points (2.1%). Meanwhile, the tech-focused NASDAQ composite took the biggest hit, plummeting 323 points or 2.6%. The selloff left investors with nowhere to hide, as all the major market sectors fell into the red. The biggest losses were suffered by consumer discretionary and technology stocks, each falling about 2.8%. At the other end of the spectrum, energy shares slipped a quarter percentage point. Altogether, the Dow and S&P remain in correction territory, down more than 10% from their 52-week highs. Meanwhile, the NASDAQ is in a technical bear market, having fallen 23% from its high.
Last Friday, the equity markets ended their four-week rally, which was based on hopes that inflation was starting to recede, and that the Fed could ease up on its monetary tightening initiatives. July’s data on consumer prices showed an 8.5% increase year over year, down from the 9.1% clocked in for June. Meanwhile, the Producer Price Index showed a 9.8% increase last month, versus 11.3% in June. However, public comments from Federal Reserve officials last week suggested that the lead bank may continue to raise interest rates aggressively.
Thus, traders will be tuned in to hear if Jerome Powell provides any clues to the Federal Reserve’s next steps when he speaks at the annual Jackson Hole economic symposium on Friday. Also, Friday brings the Commerce Department’s release of its Personal Consumption Expenditures (PCE) index for July. This measure of core inflation (which backs out food and energy costs) is closely watched by the Fed and could provide more proof that the central bank is on course.
Other economic reports include new home sales for July due out this morning, where a modest decline is expected. S&P will also be coming out with its initial manufacturing and services Purchasing Managers Indexes for August. Wednesday brings durable goods orders and the pending home sales index for July. While these releases won’t be as influential as Powell’s comments, they do help provide additional color for the overall picture.
As we approach the opening bell for today’s session, U.S. stock futures are pointing to a mixed open. Elsewhere, Asian markets were down overnight, while stocks in Europe are trading in the red. Meanwhile, oil futures are up 1.2%, at around $91.50 a barrel.
– Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
