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Stock Market Today – Friday, Aug 19: What You Need to Know

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We have arrived at the final day of a relatively less volatile week, as the bear market rally from earlier this month fades on heightened fears of a recession. As a result, stocks finished the day in the red.

Stocks Finish Friday’s Session in Negative Territory

Last Updated 4:15 PM EST

Stock indices finished today’s trading session in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 decreased 0.86%, 1.95%, and 1.29%, respectively.

The financial sector (XLF) was the session’s laggard, as it fell by 2.1%. Conversely, the healthcare sector was the session’s leader, with a gain of 0.26%. In addition, WTI crude oil fell 0.34%, reaching $90.07 per barrel. It is currently off the session high of $92.08 per barrel.

Furthermore, the U.S. 10-Year Treasury yield increased to 2.97%, an increase of 8.4 basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 3.24%. This brings the spread between them to -27 basis points. The negative spread indicates that investors still have fears of a recession.

Compared to Yesterday, the market is pricing in a higher chance of a higher Fed Funds rate for the end of the year. In fact, the market’s expectations for a rate in the range of 3.75% to 4% increased to 18%, which is up from yesterday’s expectations of 17%. In addition, the market is now also assigning a 32% probability to a range of 3.25% to 3.5%. For reference, investors had assigned a 33% chance yesterday.

Stocks are Down Heading into the Final 30 Minutes of Trading

Last Updated 3:25PM EST

Equity markets are in the red heading into the final 35 minutes of today’s trading session. As of 3:25 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.9%, 1.3%, and 1.9%, respectively.

The consumer discretionary sector is the laggard so far, as it is down 2.1%. Conversely, the healthcare sector is the session’s leader with a gain of 0.2%.

WTI crude oil is currently hovering around the mid-$90 per barrel range, trading off its session high of $92.08 per barrel.

The price of natural gas received a slight boost after Russian state-owned gas company Gazprom announced it will close the Nord Stream 1 pipeline at the end of August for three days. The company cited maintenance as the reason but countries such as Germany believe it’s being done in retaliation to economic sanctions.

With gas flows already at 20% capacity, the move puts further pressure on Europe’s plan to stock up enough natural gas to make it through the winter. It’s possible that Europe could plunge into a recession if it can’t store enough gas, as it would impact many different industries that rely on it.

Gas Prices Continue to Decline as Oil Prices Fall

Last Updated 12:00PM EST

Equity markets are in the red halfway into the trading session. As of 12:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.9%, 1.3%, and 1.9%, respectively.

The consumer discretionary sector is the laggard so far, as it is down 2.1%. Conversely, the energy sector (XLE) is the session’s leader with a gain of 0.3%. WTI crude oil is currently hovering around the low-$92 per barrel range, which is at its session high.

Gas prices across the country continue their downward momentum. Indeed, the national average for regular gas remains below $4 per gallon. Today’s average price is $3.918 per gallon, down from yesterday’s reading of $3.931. This is significantly lower than the all-time high of $5.016 per gallon on June 14.

The highest prices can be found in Hawaii, where prices are substantially higher than the national average, at $5.335 per gallon. On the other hand, Arkansas is the state with the lowest gas prices, at $3.425 per gallon.

It’s likely that this downward trend will continue going forward as interest rates are on the rise. However, higher rates will destroy demand throughout the whole economy.

Stocks are in the Red to Start Friday’s Trading Session

Last Updated 10:00AM EST

Stock indices are in the red 30 minutes into today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.8%, 1.1%, and 1.6%, respectively.

The consumer discretionary sector (XLY) is the laggard so far, as it is down 1.7%. Conversely, the healthcare sector (XLV) is the session’s leader with a gain of 0.2%. It is currently the only sector that is in positive territory.

WTI crude oil is slightly compared to yesterday’s close as recession concerns grow. As a result, the price is hovering around the low-$90 per barrel range.

Meanwhile, bond yields are higher, as the U.S. 10-Year Treasury yield is now hovering around 2.97%. This represents an increase of more than eight basis points from the previous close.

Similar movements can be seen with the Two-Year yield, which is now at 3.27%. However, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -30 basis points.

Pre-Market Update

Stock market futures moved lower early Friday morning as the market looks forward to ending a relatively slow, albeit slightly positive, week.

Futures on the Dow Jones Industrial Average (DJIA) inched 0.33% lower, while those on the S&P 500 (SPX) lost 0.45% as of 3.39 a.m. EST, Friday. Meanwhile, the Nasdaq 100 (NDX) futures dipped 0.55%.

Semiconductor giant Applied Materials (AMAT) delivered solid quarterly results and a bullish outlook on Thursday evening, leading to a 2% rise in share prices in the after-hours.

At the end of Thursday’s session, the Dow, S&P 500, and Nasdaq 100 clocked 0.06%, 0.23%, and 0.26% gains, respectively.

Retail player Bed Bath & Beyond (BBBY) suffered a loss of nearly 20% on Thursday and around 45% in the extended trading Thursday, after its stakeholder, billionaire investor Ryan Cohen, sold the entirety of his approximately 11% stake. This weighed on the pre-market sentiment on Friday.

The Housing Market Crisis

Moreover, the crisis in the housing market was underscored on Thursday after the National Association of Realtors (NAR) revealed that the sales of existing homes in the U.S. had continued to fall in July. The exorbitant housing prices and high mortgage rates led to a 20.2% year-over-year decline in existing home sales last month.

Earlier this week, the Commerce Department had revealed that new home construction was down 9.6% month-over-month in July.

Moreover, the NAR also revealed earlier that the home-buyer sentiment has tipped into negative territory this month.

U.S. existing home sales fell in July for the sixth straight month, the longest streak of declines in more than eight years, as higher mortgage rates and a shortage of homes for sale are cooling this once red-hot market.

All these data points solidify the belief that the U.S. housing market has slowed to a recession.

Job Market Still Holding Up

However, on the positive side, the Labor Department announced that in the week ending August 12, there was a slight decline in new applications for unemployment benefits. This reflects the job market’s resilience, though slightly cooler, in the face of broader market weakness.

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