U.S. stocks nudge higher in final trading day of August

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U.S. stocks traded modestly higher early Wednesday as markets looked to regain traction in their final August session, with major indexes attempting to snap a three-day losing streak following Federal Reserve Chair Jerome Powell’s hawkish speech at the end of last week.

What’s happening
  • The Dow Jones Industrial Average DJIA, -0.11% rose 166 points, or 0.5%, to 31,956.
  • The S&P 500 SPX, +0.05% was up 28 points, or 0.7%, at 4,014.
  • The Nasdaq Composite COMP, +0.26% gained 124 points, or 1%, to trade at 12,007.

On Tuesday, the Dow fell 308 points, or 1%, while the S&P 500 and Nasdaq Composite each dropped 1.1%. Through Tuesday’s close, the Dow was on track for a 1.5% August fall, while the S&P 500 was down 1.8% and the Nasdaq was off 2.1%.

What’s driving markets

Stocks got off to a wobbly start but were largely positive after ADP estimated that U.S. private-sector employment rose by 132,000 in August, while annual pay rose 7.6%. Stocks were rattled on Tuesday after data showed a larger-than-expected number of job openings, underlining fears the Federal Reserve would be more aggressive in tightening monetary policy.

The S&P 500 index fell 5.1% in the previous three sessions, after Fed Chairman Jerome Powell last Friday raised fears that the central bank would persevere with higher interest rates to combat inflation even if it meant damaging the economy and hurting the stock market.

The more positive tone on Wednesday came after better-than-forecast U.S. jobs and consumer confidence reports on Tuesday were seen allowing the Fed to fully prosecute its aggressive monetary tightening policy, a move that appeared to reinforce the market mantra that good economic news would be bad for stocks, and vice versa.

“We held a view over the past 2-3 months that ‘bad dataflow will start to be seen as good’, and believe this will likely continue to hold,” said Mislav Matejka, equity strategist at JP Morgan.

“For example, last week in the U.S. the very weak PMIs [purchasing managers indices] and weak housing dataflow were met by favorable equity trading on the day, lending support to this call,” he added.

A fresh batch of worldwide PMIs, due for release on Thursday, are just one feature within a busy few days of labor data that may thus provide meaningful market momentum.

Companies in focus
  • Shares of meme-stock favorite Bed Bath & Beyond Inc. BBBY, -23.93% plunged 26% after the struggling home-goods retailer’s strategic update, in which the company said it would cut its workforce and close stores, and provided a downbeat sales outlook.
  • Seagate Technology Holdings PLC STX, -3.92% on Wednesday issued a profit warning for its fiscal first quarter, citing a worsening macroeconomic backdrop. Shares fell 4%.
How are other assets faring
  • U.S. crude futures CL.1, -1.23% fell 1.1% to $90.63 a barrel, adding to the previous session’s sharp losses which came amid fears slowing global growth would crimp demand.
  • The 10-year Treasury yield TMUBMUSD10Y, 3.113% rose 0.8 basis point to 3.12.
  • The ICE U..S. Dollar index DXY, +0.07% added 0.2% to 108.97, near a 20-year high, leaving gold GC00, -0.39% down 0.7% at $1,723.50 an ounce.
  • Bitcoin BTCUSD, +1.45% advanced 2% to $20,211.
  • Asia and Europe markets were mostly softer after Wall Street’s overnight retreat. Hong Kong’s Hang Seng HSI, +0.03% lost 0.2% and the Shanghai Composite SHCOMP, -0.78% fell 0.8% after data showed China’s manufacturing sector weakened. Europe’s Stoxx 600 SXXP, -0.61% slipped 0.5%.