Stock Market News for Aug 20, 2020
Wall Street closed lower on Wednesday following the tepid economic outlook about the U.S. economy provided by the Fed in its July FOMC meeting minutes. Moreover, geopolitical tensions between the United States and China heightened which dampened investors' spirit. All three major stock indexes ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.3% to close at 27,692.88. Notably, 22 components of the 30-stock blue-chip index ended in the red while 8 finished in green. The tech-laden Nasdaq Composite ended in negative territory to close at 11,146.46, shedding 0.6%. In the intraday trading, the tech-heavy index recorded all-time high at 11,257.42.
Moreover, the S&P 500 slumped 0.4% to end at 3,374.85. In the intraday trading, the broad-market index posted a fresh all-time high at 3,399.74. The Real Estate Select Sector SPDR (XLRE) and the Energy Select Sector SPDR (XLE) tumbled 2.1% and 1.2%, respectively. Notably, all eleven sectors of the benchmark index closed in negative territory.
Meanwhile, Apple Inc. AAPL, a common member of all three major stock indexes, has become the first U.S. corporate to reach the landmark of $2 trillion market capital. Apple sports a Zacks Rank # 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The fear-gauge CBOE Volatility Index (VIX) was up 4.8% to 22.54. A total of 8.61 billion shares were traded on Wednesday, lower than the last 20-session average of 9.72 billion. Decliners outnumbered advancers on the NYSE by a 1.62-to-1 ratio. On Nasdaq, a 1.23-to-1 ratio favored declining issues.
Fed's July FOMC Minutes
Fed has released the minutes of its latest FOMC meeting conducted on Jul 28-29 in which officials have reduced the growth forecast for the rest of the year. Fed members have strongly advocated for more fiscal stimulus beside an unprecedented monetary stimulus package provided by the central bank in order to support the coronavirus-stricken economy.
Fed officials at the meeting “agreed that the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term.”
The Fed will maintain the benchmark interest rate to a range of 0% to 0.25% until the central bank is “confident that the economy had weathered recent events and was on track to achieve the Committee’s maximum employment and price stability goals.” Aside from the concern about economic growth, Fed officials are worried about risks to the financial system.
Geopolitical Tensions Between U.S. and China
Adding to investors' jitters, the ongoing geopolitical tensions between the United States and China heightened. The review meeting on the Phase 1 trade deal through a video conference between high-level delegates from both sides that was postponed last weekend was cancelled by President Trump on Aug 19. Moreover, U.S. universities and colleges have been directed by the State Department that it is a mandatory to divest Chinese stockholdings, ahead of a potential delisting of those firms.
Notably, earlier in the month, President Trump banned Chinese social app TikTok and WeChat and said that he could exert pressure on more Chinese entities. On Aug 17, the Trump administration announced it will further tighten restrictions on China’s Huawei Technologies in order to restrict it to get access to commercially available high-end semiconductors produced by U.S. tech giants.
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