How do stocks trade?
The Dow Jones Industrial Average DJIA, +0.40% fell 71 points, or 0.2%, to 33,690. The S&P 500 SPX, +0.28% fell 17 points, or 0.4%, to 4,264. The Nasdaq Composite COMP, +0.43% lost 46 points, or 0.4%, to trade at 13,002.
The S&P 500 rose 3.3% last week, its fourth straight weekly gain and its longest such winning streak since November. The Dow rose 2.9% last week, while the Nasdaq Composite gained 3.1%. What drives the markets Disappointing economic news from China helped set the tone, with retail sales, investment and industrial production slowing and missing forecasts. China’s central bank cut lending rates. “Poor data from China is also weighing on recession concerns for the rest of the world,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note. Also, the New York Fed’s Empire State Business Conditions Index, a gauge of manufacturing activity in the state, fell 42.4 points to a negative 31.3 in August, the regional Fed said Monday. The number didn’t help sentiment, though economists took it with a grain of salt. The Empire State data “wasn’t all bad: delivery times were flat for the first time in nearly two years, employment managed to grow and inflationary pressures didn’t pick up,” said Oren Klachkin, chief U.S. economist at Oxford Economics. Note. “At the same time, manufacturers were not happy about the outlook for the next six months. We caution against taking too much away from this report, as New York’s manufacturing is a small part of the nation’s manufacturing base,” he wrote. Concerns about slowing demand from China weighed on the energy sector, with WTI CL.1 crude futures down 5.3% at $87 a barrel. The Energy Select Sector SPDR ETF XLE, -1.89% fell 3.7% but remains up about 37% for the year to date. Read: Energy remains a sweet spot for investors. Here’s a list of “enabled” stocks to consider. Stocks struggled to maintain their upward momentum after a strong run that saw the S&P 500 snap a four-week winning streak that delivered its best percentage gain for such a period since November 2020. Similarly, the tech-heavy Nasdaq Composite is near a four-month high after rising 22.6% from its mid-June low. Stocks rallied last week as the U.S. consumer price index and producer price index showed a decline in inflation, although it remains quite warm. “Good inflation news coming after a very strong July payrolls report has revived belief in a ‘soft landing’ for the economy. This is an outcome that we thought was at least as likely as a recession, and now markets are getting closer to pricing in that scenario,” Solita Marcelli, Americas chief investment officer at UBS Global Wealth Management, said in a note. “The risk is that the markets will catch up, especially with investor FOMO starting to set in,” he wrote, referring to the phenomenon known as “fear of missing out.” Technical indicators speak of the improved tone lately. The Cboe Volatility Index VIX, +2.36% , a measure of expected market volatility that typically rises when investors are fearful, closed last week below its long-term average of 20. However, the VIX, as it is also known, increased by 5.2%. until 20.55 on Monday. See: Can the stock market fall without Wall Street’s fear meter reaching ‘panic’ levels? The breadth of the market’s latest rally is also seen as supportive, with Bespoke Investment noting that the percentage of S&P 500 stocks trading above their 50-day moving average has jumped to 88% from just 2% on June 16. Source: Bespoke Investment Also on Friday, the S&P 500 closed above 4,231, marking a more than 50% retracement of the 2022 selloff from the Jan. 3 record near the June 16 low. Technical analysts noted that the S&P 500 has not in the past half-century recaptured a 50% selloff in a bear market and then continued to set new cycle lows, although they warned that there is still potential for sharp losses and near-term volatility. Read: Why stock bulls applaud S&P 500’s close above 4,231 In other economic data, the National Association of Home Builders’ monthly confidence index fell 6 points to 49 in August, the trade group said Monday – the first time since 2020 that it fell below the breakeven mark of 50. Companies in focus
The shares of Walt Disney Co. DIS, +2.76% rose 1.8% after Dan Loeb said Monday that hedge fund Third Point LLC, which liquidated a large stake in the entertainment giant earlier this year, had “repurchased a significant stake” to the company and will seek to work with its management team to pursue strategic changes.
Tesla Inc. TSLA, +3.25% CEO Elon Musk marked a company milestone on Sunday, tweeting that the electric vehicle maker had produced more than 3 million vehicles, with a third of them built in China. Shares rose 1.4%. Shares of Bed Bath & Beyond Inc. BBBY, +8.96% rose 7.9%, putting the meme stock on track for a fourth straight gain. The stock had risen 21.8% on Friday and had rallied 32.3% since falling 14.2% on Aug. 9 to snap its longest winning streak in 15 years. The home goods retailer’s meme stock is headed for its 13th gain in 14 sessions.
How other assets work
The yield on the 10-year Treasury TMUBMUSD10Y, 2.784% fell 6.8 basis points to 2.782%. The ICE U.S. Dollar Index DXY, +0.71% rose 0.6%, and the stronger buck helped push gold GC00, -1.17% down 1.2% to trade below $1,794 an ounce . Bitcoin BTCUSD, -0.33% rose above $25,000 for the first time since June, but then reversed, falling 1.1% to $24,000. In Europe, the Stoxx 600 SXXP, +0.34% rose 0.3%, while London’s FTSE 100 UKX, +0.11% was flat. In Asia, the Shanghai Composite SHCOMP, -0.02% closed fractionally lower, while the Hang Seng Index HSI, -0.67% fell 0.7% in Hong Kong and Japan’s Nikkei 225 NIK, +1.14% gained up 1.1%.
Hear Carl Icahn at the Best New Ideas in Money festival on September 21st and 22nd in New York. The legendary trader will reveal his take on this year’s wild market ride.
