Stocks off to a mixed start, stay lower for the week

Stocks are slightly higher in early trading on Wednesday as Wall Street prepares to close the books on a tough August that started strong but left the market deeper in the red.

The S&P 500 is up 0.4% as of 10 a.m. EST. The benchmark is coming off a three-day skid and is on track to end the month with a 2.9% loss after jumping 9.1% in July.

The Dow Jones Industrial Average rose 37 points, or 0.1%, to 31,823 and the Nasdaq rose 0.7%.

Communication, technology and healthcare companies have helped boost the market. Meta platforms grew by 5.2%, PayPal by 4.2% and Amgen by 1.2%.

Energy companies fell along with crude oil prices. Occidental Petroleum slipped 2.1%.

Bed Bath & Beyond fell around 23% after announcing a major restructuring and stock sale, while Snap, the operator of messaging app Snapchat, jumped 10.3% after announcing that he would lay off 20% of his workforce.

Bond yields rose. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, rose to 3.13% from 3.11% on Tuesday evening.

European markets were down and Asian markets closed mixed on Wednesday.

Stocks got off to a good start in early August, continuing a rally in July. Investors were encouraged to see these signs that inflation, although still elevated, was stabilizing. That fueled optimism on Wall Street that the Federal Reserve might be able to cut interest rate hikes, its main weapon in its fight to lower inflation. The gains followed a weak first half where the S&P 500 fell 20% from its most recent peak and entered a bear market.

That optimism faded in mid-August when the central bank signaled it would continue raising rates for as long as needed to rein in the highest inflation in four decades. On Friday, Federal Reserve Chairman Jerome Powell outlined the Fed’s intent in a speech at the central bank’s annual symposium.

Wall Street fears that the Fed is putting the brakes on an already slowing economy too hard and pushing it into a recession. Rising interest rates have also hurt investment prices, especially for more expensive stocks like technology companies.

Traders are now trying to better understand how far and how fast the Fed’s rate hikes will go, starting with the central bank’s next interest rate policy meeting on September 20-21. The Fed has already raised interest rates four times this year and is expected to raise short-term rates another 0.75 percentage points at its September meeting, according to CME Group.

Investors are watching economic data closely for any further signs of the economy slowing down or inflation slowing or at least staying at its current level. Businesses and consumers have been hit hard by rising prices for everything from food to clothing, but recent drops in gasoline prices have brought some relief.

Strong US jobs data helped fuel expectations of further interest rate hikes. The Labor Department announced on Tuesday that there were two jobs for every unemployed person in July, giving arguments to Fed officials who argue the economy can tolerate more rate hikes to tame inflation that is at its peak. highest for several decades.

More employment reports are available later in the week, with data on unemployment benefits coming Thursday and the August jobs report due Friday. Analysts expect both to show a robust job market.

In Europe, markets fell after a report showed inflation in countries using the euro hit a new high in August as energy prices soared, largely due to Russia’s war in Ukraine. Annual inflation in the 19 countries of the euro zone reached 9.1%, against 8.9% in July, according to the European Union statistics agency Eurostat.

Inflation is at its highest level since the euro began recording in 1997. The latest figures add pressure on European Central Bank officials to keep raising interest rates, which can control inflation, but also stifle economic growth.

Comments are closed.