U.S. stocks ended lower on Wednesday as sluggish job growth in the private sector and anxieties about a looming recession following Chair Powell’s Jackson Hole speech drove major indexes to their fourth straight losing session.
What happened
- The Dow Jones Industrial Average DJIA fell 280.44 points, or 0.9%, to finish at 31,510.43.
- The S&P 500 SPX was off 31.16 points, or 0.8%, to settle at 3,955.
- The Nasdaq Composite COMP finished 66.93 points lower, or 0.6%, to 11,816.20.
On Tuesday , the Dow fell 308 points, or 1%, while the S&P 500 and Nasdaq Composite each dropped 1.1%.
According to Dow Jones Market Data. The Dow finished August down 3.9%, while the S&P 500 brought its loss for the month to 4.2%. The Nasdaq posted a monthly drop of 4.6%.
Deep Dive: Here are the worst (and best) performing stocks of August and for 2022
What drove markets
Stocks extended a losing streak to four sessions on Wednesday as three major benchmarks recorded around 4% of losses for the month of August.
Ahead of the opening bell, ADP estimated that U.S. private-sector employment rose by 132,000 in August, while annual pay rose 7.6%.
The ADP figure came in below forecasts, but economists and analysts said they were still attempting to figure out how to assess the revamped data series after the previous version proved to be an unreliable guide to official monthly jobs data from the U.S. Labor Department. ADP has said the new series is meant to be a complement to the official figures rather than a guide.
“With only limited details as to how they arrived at that number, we have little confidence that this new survey will prove to be any more accurate a guide to the official payrolls tally than the previous incarnation,” said Michael Pearce, senior U.S. economist at Capital Economics, in a note.
The August jobs report that is scheduled for release on Friday is expected to show the economy added 318,000 jobs, according to a survey of economists by The Wall Street Journal. The unemployment rate is seen steady at 3.5%, while the average hourly earnings are estimated to rise 0.4% following a 0.5% rise the previous month.
See : U.S. likely added 318,000 jobs this month — but beware an August surprise
“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.”
Three major indexes retreated 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 choppy trading 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.
Meanwhile, investors worry the U.S. is on the brink of an economic downturn with one economist predicting a ‘whopper’ of recession in 2023 , and inflation seen remaining high through 2024 because of the growth in money supply. According to Dan Raju, chief executive officer of Tradier, a brokerage service provider, most retail investors still trade as though a recession is a foregone conclusion at this stage.
“They (retail investors) find opportunity in really short term strategies, but it is more of a wait-and-see before they implement anything long term,” said Raju in an interview with 江湖电竞最新版比赛(江湖电竞投注app网站) on Wednesday.
According to Raju, one of the key indicators to decide if an investor is bullish or not about the market is to see how much cash is sitting in the account. “Most traders generally tend to have an average of 40 to 45% of the total portfolio in cash, when it comes to active retail traders. I’ve seen that now touch like 60 to 65%,” he added.
Companies in focus
- Shares of meme-stock favorite Bed Bath & Beyond Inc. BBBY finished 21.3% lower 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 on Wednesday issued a profit warning for its fiscal first quarter, citing a worsening macroeconomic backdrop. Shares ended 3.5% lower.
- Robinhood HOOD shares rose 0.8% after Barclays downgraded the company’s stock and said its near-term outlook looks grim, with increasing competition and mounting regulatory risks.
How did other assets fare
- West Texas Intermediate crude for October delivery CL00 CL CLV22 fell $2.09 or 2.3%, to settle at $89.55 a barrel on the New York Mercantile Exchange, adding to the previous session’s sharp losses which came amid fears slowing global growth would crimp demand.
- Gold futures GC00 GCZ22 for December delivery were down $10.10, or 0.6%, to settle at $1,726.20 per ounce on Comex, with prices for the most-active contract down more than 3% for the month.
- The U.S. dollar index DXY , a gauge of the dollar’s strength against a basket of rivals, marginally declined.
- The yield on the 2-year Treasury BX:TMUBMUSD02Y was 3.448% versus 3.466% on Tuesday, while the yield on the BX:TMUBMUSD10Y advanced to 3.131% from 3.107% a day earlier.
- Bitcoin BTCUSD was up 0.9% to trade below $20,148.
- In Europe, the STOXX Europe 600 XX:SXXP ended 5.3% lower, while the FTSE 100 UK:ZOO finished 1.9% lower. In Asia equities, Japan’s NIKKEI 225 JP:NIK gained 1%, and Hong Kong’s Hang Seng HK:HSI shed 1%. China’s Shanghai Composite CN:SHCOMP fell 1.6%.
— Jamie Chisholm contributed to this article.
