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Market Recap: Tuesday, August 25

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The markets closed mixed as the DOW lagged behind both the NASDAQ and S&P 500 even though the index saw a shake up in the blue chip index, adding Salesforce, Amgen, and Honeywell. The Final Round panel discusses the latest.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round" here on Yahoo Finance. I'm Seana Smith. We have just around 45 seconds left in the trading day. And stocks are mixed. We have the Dow off its lows of the day, right now off just around 70 points. S&P and NASDAQ both holding on to gains, with the S&P up just around 3/10 of a percent and the NASDAQ up just about 3/4 of a percent.

Taking a look at some of the action that we're seeing within the major indexes today, the laggards when it comes to the Dow-- some interesting notes here, Exxon, Boeing, and Raytheon Technologies are amongst the worst performers. Exxon saw-- off just around 3% today, Boeing off just around 2%, and Raytheon Technologies of just around 1 and 1/2%.

[BELL RINGING]

That does it for the trading day today. Again, the Dow the only major average in the red, off just around 2/10 of a percent. S&P and NASDAQ, though, holding on to gains.

And we mentioned some of those losers in the Dow. It's important to point out some of the big changes that we got after the bell yesterday, shortly after this show wrapped up, when it comes to the Dow Jones Industrial Average. Exxon, Pfizer, and Raytheon Technologies, those three stocks are going to be digging out of the Dow. Salesforce, Amgen, and Honeywell are now in. So Exxon and Raytheon Technologies amongst the worst performers in the Dow today. Pfizer also under a bit of pressure. Then, on the other hand, Salesforce, Amgen, and Honeywell, all three of those stocks closing in the green today.

Some of the broader action that we're seeing in the market sector wise-- communication services amongst the top performers. Consumer discretionary and health care leading the way. The laggards-- energy moving to the downside, as well as materials, industrials, and utilities.

We also got some mixed data here on the econ front. And it's interesting here when we point out some of the trends that we're seeing. So new home sales surging to the highest level since 2006 on the heels of some of that better-than-expected housing data that we got out last week.

And then on the other side of things, the US consumer confidence falling for the second month in a row in the month of August. And this, of course, comes as many more Americans get a little bit more concerned about the economic outlook. But again, Wall Street and Main Street, two totally different pictures, as we have stocks just near all-time highs, with the NASDAQ up just four straight record closes in a row. But again, the picture here on Main Street looking very different than what we're seeing reflected in the stock market once again today.

Well, I want to bring in my co-host for the next hour. We have Myles Udland, along with Rick Newman, Akiko Fujita, and Jared Blikre with us. And Myles, I mean, what's your big takeaway from the action today? Because if you take a look at the broader averages, the NASDAQ up, a record close for four days in a row, Dow under a bit of pressure, and then the econ data very mixed.

MYLES UDLAND: Yeah, I mean, I think all of that is kind of like yeah, that's sort of been the story, right, for some time. And I think going back to-- your mention at the top about the Dow reshuffle, I think it's interesting to kind of dwell on this for a point. I think it's worth discussing, because the significance of Exxon, a company that seven years ago was the world's largest company, now coming out of an index that it's been a member of for 88 years, to be replaced by Salesforce, a company that I think a lot of us jokingly, but also seriously, would say now, what exactly does Salesforce do?

I know that they make a lot of money and they buy a lot of companies and their stock only goes up. But I think it's a pure B2B play. And it speaks to where the economy is headed. If data is the new oil, right, well, then Salesforce has all the data and Exxon has the literal oil. There's not as much value in that anymore.

And think while these are symbolic, and Howard Silverblatt, we had him on last hour, he said the Dow is a social construct. And I think it's important to remember that that is worth something, even if the price weighting of the indexes is kind of silly and doesn't exactly work right. I think if we tried to look at what's the story of today's market, well, that shuffle we saw-- because the Honeywell for Raytheon swap, that's a one for one. Amgen for Pfizer, maybe you say biotech for traditional pharma, where things are going. But those are kind of one-for-one swaps.

The Salesforce for Exxon I think is a as good a symbolic move as any to explain what's happened in the last six months. And obviously, some of the details will change along that time. But every day, it feels like we come on here and we say, well, the economy is not doing so great, but stocks went up. And I feel like that shift can be kind of fit into a narrative of it kind of explains everything, right?

SEANA SMITH: It certainly does. I mean, it really just highlights the fact that it's just a sign of how times have changed, when you talk about the fact that Salesforce is now included in the Dow. We don't have Exxon any longer included in that major average. And then also, it's important to point out that the reason why we're seeing all these changes here is because of Apple's four-for-one stock split. And that's something that Howard Silverblatt but really emphasized last hour for us.

But Jared, I'm curious just to get your reaction to some of the moves that we saw today, and NASDAQ up four record highs in a row, S&P hits its third record close in a row, pushing further above 3,400. Hey, right now, we're not too far from 3,500. So maybe it's not-- we won't have to wait as long as we initially thought here to reach that next milestone.

JARED BLIKRE: No, and there is lots of milestones to look at. And each market, each index is a little bit different. Let's look at the Dow here. This is today's price action on the YFi Interactive.

And right on the open, we hit this high around 28,400-- 28,400 or thereabouts. And this corresponds to this gap right in here, right before the selloff. And the S&P 500 did a very similar thing about a week or two ago. And we'll just see that here. We have this gap, and this was actually several weeks ago. It was able to climb above it and reach new highs.

And I don't see why the Dow won't be able to do the same thing. Do we take a little bit of a stumble first? That's a big question.

We were talking to Liz Ann Sonders in the last hour. And she raised a very important point, that the advance decline line for the New York Stock Exchange and the S&P 500 have been rolling over. So you want to see them make new highs, these indicators showing broad participation when the index is making new highs.

And we don't have that confirmation yet. It can take a week or two. But you do want to see that. Otherwise, the market tends to roll over.

We also have a little bit less momentum this time of breaking through these highs than we did in other spurts up. And that sets up a negative potential divergence. So we're watching that.

And then we've got the VIX here. The VIX is at low levels, but it looks like it kind of wants to spike. It could easily go down and trend down for several weeks, even another month or two. But right now, 20 is a barrier. So we'll have to monitor that as well.

And then we've got the 10-year T-note yield. That is up 4 basis points-- doesn't look like a lot here. But when you take a look at a shorter term chart-- here's a two-month chart. You can see it really does want to go higher. And a lot of times when we see a movement in any kind of market where it breaks to new highs and then comes back and it tends to chop around for a while. When we do break this range, whether to the upside or the downside, expect to get some continuation.

Let's take a look at our canary. We already took a look at the NASDAQ last hour. We'll take a look at the leading markets. And it's instructive what is leading today.

We've got IPO-- that's the Renaissance IPO ETF with the same ticker, IPO-- shows a lot of risk taking here. KWEB, that's a Chinese internet ETF. We saw China's stocks surging today. And then also biotech, followed by the chip stocks, IGV is tech software, emerging markets.

All these point to growth stocks. And that's very interesting when you consider that we saw the 10-year rise today. Usually, we see value and cyclical outperform. Even though they did early on in the session, they gave up those gains and were underperformers for the rest of the day.

So to the downside, we have XHB. That's a homebuilders ETF. Not surprising, as we're seeing rates rise. And then XRT is that retail ETF. So kind of a mixed picture today. But we'll see what happens for the rest of the week here, Seana.