Last Updated 4:04 PM EST
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Stock indices finished today’s trading session in the red. The Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 1.1%, 1.16%, and 1.02%, respectively. The energy sector (XLE) was the session’s laggard, as it lost 2.09%. Conversely, the healthcare sector (XLV) was the session’s leader but still finished with a loss of 0.35%.
Furthermore, the U.S. 10-Year Treasury yield increased to 4.22%, an increase of two basis points. Conversely, the Two-Year Treasury yield decreased, as it hovers around 4.95%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 5% in the third quarter.
This is higher than its previous estimate of 4.1%, which can be attributed to recent releases from the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, and the U.S. Department of the Treasury’s Bureau of the Fiscal Service.
Last Updated: 1:20PM EST
Stock indices remain under pressure at the time of writing. During a Minneapolis conference Q&A on Tuesday, Minneapolis Fed President Neel Kashkari noted that while the Federal Reserve’s rate hikes have somewhat decelerated the U.S. economy, progress on inflation is evident. Nevertheless, inflation remains too high.
Kashkari, emphasizing a cautious approach, mentioned he’d need “convincing evidence” that inflation is nearing the Fed’s 2% target before halting rate hikes. He expressed surprise that raising interest rates didn’t impact the housing sector as expected, attributing this to a lingering housing market deficit since 2009.
Kashkari addressed various topics, highlighting the Fed’s proposals on banks’ capital requirements as insufficient, though satisfactory. The March regional bank failures were a result of banks’ poor loan decisions during the pandemic, causing panic among depositors. While he recognizes stabilization in some deposit flows, Kashkari remains wary, pointing to the unresolved inflation issue.
On global trade, he noted a shift from re-shoring to “friend-shoring,” with companies transferring manufacturing to U.S.-friendly nations over China.
Last Updated: 11:00AM EST
Stocks are in the red so far in today’s trading session amid mixed economic data. Earlier today, the Federal Reserve Bank of New York released its Empire State Manufacturing Index report, which measures the relative level of general business conditions in New York State based on a survey of 200 manufacturers. A level above 0.0 indicates improving conditions, and below indicates worsening conditions.
Today’s report came in at -19, which was a significant miss compared to expectations of -1. This follows last month’s print of 1.1. It’s worth noting that over the past 12 months, conditions only improved in four of those months.
Furthermore, the National Association of Home Builders released its U.S. NAHB Housing Market Index for March. The report measures home builder sentiment by surveying around 900 companies. A reading above 50 indicates that more home builders have a positive view of market conditions than a negative one. Today’s print came in at 50, which was significantly lower than the expectation of 56.
NAHB Chairman Alicia Huey pointed to climbing mortgage rates and high construction costs as reasons for the decline in builder sentiment.
Last Updated: 9:33AM EST
The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were down 0.13%, 0.32%, and 0.40%, respectively, at 9.34 a.m. EST, August 15. While July retail sales rose 0.7% over the previous month, core retail sales rose by 1% versus the Street’s expectations of a 0.3% decline.
Further, higher agricultural as well as nonagricultural prices led to a 0.7% increase in export prices during July. Meanwhile, higher fuel prices resulted in a 0.4% increase in import prices during the month.
The three major indices ended Monday on a positive note after last week’s sell-off. In particular, Nvidia (NVDA) stock jumped 7% after Morgan Stanley said that the semiconductor company remains its Top Pick, given the massive shift in spending towards artificial intelligence. Also, shares of U.S. Steel (X) jumped 36% on Monday after Esmark Inc. announced its intent to acquire the steel giant for $35 per share in cash.
Meanwhile, three U.S. homebuilders stocks – D.R. Horton (DHI), Lennar (LEN), and NVR (NVR) are likely to trend higher today, as Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) disclosed new positions built in these stocks in the second quarter.
Another interesting update is that hedge fund manager Ray Dalio’s Bridgewater Associates sold its holdings in Netflix (NFLX), Broadcom (AVGO), and Home Depot (HD) in Q2 2023. Meanwhile, the sudden departure of Discover Financial Services’ (DFS) CEO dragged down its stock.
Earnings in focus today include Home Depot (HD), Agilent Technologies (A), and Sea Limited (SE). Analysts expect Home Depot’s Q2 results to be under pressure due to the impact of macro challenges on big-ticket discretionary spending. Retail giants Walmart (WMT) and Target (TGT) are also scheduled to announce their Q2 earnings this week.
Elsewhere, European markets trended mixed amid varied macro data from across the globe. U.K. wage growth rate (monthly salaries excluding bonuses) increased 7.8% year-over-year in the three months through June, marking a record high. Also, the U.K. unemployment rate unexpectedly increased to 4.2% in the three months through June from the previous reading of 4% for the three months through May.
In other international news, on Monday, Argentina dollar bonds plummeted and the peso weakened after right-wing outsider Javier Milei scored surprisingly strong support in a primary election.
Asia-Pacific Markets Ended Mixed on Tuesday
Asia-Pacific markets were mixed on Tuesday in reaction to macro data from China and Japan. Japan’s Nikkei and Topix indices were up 0.56% and 0.41%, respectively, as the country’s real gross domestic product (GDP) grew 1.5% in the second quarter from the previous quarter, surpassing expectations of a 0.8% expansion.
The better-than-anticipated expansion was driven by solid exports. On an annualized basis, Japan’s economy expanded 6% in the June quarter, ahead of economists’ expectation of 3.1%.
In contrast, Chinese indices fell in reaction to disappointing industrial output and retail sales data. Hong Kong’s Hang Seng index and China’s Shanghai Composite and Shenzhen Component indices fell 1.03%, 0.07%, and 0.70%, respectively.
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