Wall Street closed mixed on Thursday as investors waited for Fed Chair Jerome Powell’s speech scheduled on Aug 23 at the central bank’s economic policy symposium in Jackson Hole, WY. Meanwhile, positive data on U.S. labor market and negative data on U.S. manufacturing kept investors sidelined. The Dow ended in positive territory while both the S&P 500 and Nasdaq Composite finished in the red.
The Dow Jones Industrial Average (DJI) gained 0.2% to close at 26,252.24. The S&P 500 slid 0.1% to close at 2,922.95. The Nasdaq Composite Index closed at 7,991.38, dropping 0.4%. The fear-gauge CBOE Volatility Index (VIX) increased 5.6% to close at 16.68. A total of 5.65 billion shares were traded on Thursday, lower than the last 20-session average of 7.48 billion. Decliners outnumbered advancers on the NYSE by a 1.16-to-1 ratio. On Nasdaq, a 1.54-to-1 ratio favored declining issues.
How Did The Benchmarks Perform?
The Dow closed in positive territory with 15 components of the 30-stock index closing in the green while the remaining 15 ended in red. The blue-chip index’s gain was mainly boosted by a 4.2% surge in shares of The Boeing Co. BA with a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 also closed in negative territory. The Materials Select Sector SPDR (XLB) lost 0.7% while the Financials Select Sector SPDR (XLF) gained 0.7%. Notably, five out of total 11 sectors of the benchmark index closed in the red while six finished in green. The Nasdaq Composite ended in the red due to poor performance from large-cap tech stocks.
Jackson Hole in Focus
Market participants will closely monitor whatever signal will be given by the Fed Chair on Friday at 10 AM EST to get a clue to the central bank’s future monitory stance.Powell’s speech get huge importance in view of the recent global trend of rate cut to combat economic slowdown by several major central banks. Investors will also try to guess whether a second rate cut is coming in the next Fed FOMC meeting scheduled Sep 17-18, and if yes then at what magnitude. Economists and financial experts are currently divided about what should be Fed’s future course of action.
U.S. Manufacturing Facing Trouble
The U.S. manufacturing sector is gradually slowing down in past several months. On Aug 22, IHS Markit’s Flash Purchasing Managers’ Index showed U.S. manufacturing activity for the month of August plunged to its 10 year low level at 49.9 from 50.4 in July. Notably, a reading below 50 means the U.S. manufacturing contracted in August. Likewise, the services sector index plummeted to 50.9 in August from 53.0 in July, a 3-month low.
Following IHS Markit manufacturing data, the yields between 2-year and 10-year U.S. Treasury Notes inverted for a brief time period. This happened for the third times since Aug 14, when 2-10 yield inversion took place for the first time since December 2005.
Strong Labor Market Data
The Department of Labor reported that the number of people who applied for unemployment benefits fell 12,000 to 209,000 for the week ended Aug 17. The figure was lower than the previous week’s claims of 221,000 as well as the consensus estimate of 217,000. Meanwhile,the number of people already collecting unemployment benefits – popularly known as continuing claims -- fell by 54,000 to 1.67 million. This figure currently stands at its 40 year low level.
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