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Stock Market Today – Monday, August 29: What You Need to Know

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The Federal Reserve is not slowing down with its interest-rate hiking campaign anytime soon, and this is making investors reassess their portfolios again, wiping out the market’s gains from August. As a result, stocks finished today’s trading session in the red.

Stocks Finish Monday’s Session in the Red

Last Updated 4:20PM EST

Stock indices finished today’s trading session in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 fell 0.57%, 0.67%, and 0.96%, respectively. The technology sector was the session’s laggard, as it decreased by 1.32%. Conversely, the energy sector was the session’s leader, with a gain of 1.53%.

Furthermore, the U.S. 10-Year Treasury yield increased to 3.11%, an increase of more than six basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 3.43%. This brings the spread between them to -32 basis points. The negative spread indicates that investors still have fears of a recession.

The Atlanta Federal Reserve recently updated its GDPNow reading, which allows it to estimate GDP growth in real time. Currently, it estimates that the economy will see an annualized expansion of 1.57% in the third quarter after experiencing two consecutive quarters of decline.

This is up from the previous reading of 1.38%. However, it’s also worth mentioning that it’s down from the reading before that, which was an estimate of 1.62%. The “nowcast” becomes more accurate as more economic data is released throughout the quarter.

Therefore, it will be interesting to see if the estimate continues to fall, going forward. In the previous quarter, the estimate started off positive and eventually ended up correctly estimating a GDP decline by the end of Q2.

59% of Americans Live Paycheck-to-Paycheck

Last Updated 3:30PM EST

Stocks are negative heading into the final 30 minutes of today’s trading session. As of 3:30 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.2%, 0.3%, and 0.5%, respectively.

The technology sector is the laggard so far, as it is down 0.9%. Conversely, the energy sector is the session’s leader with a gain of 2.1%.

A report released by LendingClub highlighted that fewer Americans were living paycheck-to-paycheck in July compared to June. Indeed, 59% of Americans reported struggling in July compared to 61% in June. Nevertheless, it’s still higher than the 54% seen in July 2021.

When looking at those who earn less than $50,000 per year, this number rises to almost 75%. For those who make between $50,000 and $100,000, the amount living paycheck-to-paycheck is 63%.

The month-over-month decrease can be attributed to easing inflation, which has seen food and energy prices pull back from their peaks. However, those earning less money continue to have increased difficulty. Even with easing inflation, prices are still significantly higher than they were last year.

As a result, consumers are being forced to rely on credit cards and savings to fund basic necessities.

Gas Prices Continue to Decline

Last Updated 12:00PM EST

Stock indices are in the red halfway into today’s trading session. As of 12:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.3%, 0.4%, and 0.8%, respectively.

The technology sector (XLK) is the laggard so far, as it is down 1.2%. Conversely, the energy sector is the session’s leader, up 2.2%.

WTI crude oil is currently hovering around $96 per barrel, as it trades not too far away from its session high of $92.30 per barrel. The commodity is down 2.5% after hitting a high of $96.43.

Prices at the pump continue to decline. The national average for regular gas is $3.85 per gallon, down from yesterday’s reading of $3.853. This is significantly lower than the all-time high of $5.016 per gallon on June 14.

The highest price can be found in Hawaii, where prices are substantially higher than the national average, at $5.306 per gallon. On the other hand, Arkansas is the state with the lowest gas price, at $3.353 per gallon.

It’s likely that this downward trend will continue going forward as the Federal Reserve looks to raise interest rates to fight inflation. However, higher rates will destroy demand throughout the whole economy. As a result, lower gas prices might have to come at the cost of a recession.

Stocks are in the Red to Start Monday’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 0.6%, 0.5%, and 0.5%, respectively.

The healthcare sector (XLV) is the laggard so far, as it is down 0.7%. Conversely, the energy sector (XLE) is the session’s leader, with a gain of 2%.

WTI crude oil is up over 2% on expectations that OPEC will reduce output in order to keep prices elevated. As a result, the price is hovering around the mid-$95 per barrel range.

Meanwhile, bond yields are higher, as the U.S. 10-Year Treasury yield is now hovering around 3.11%. This represents an increase of more than six basis points from the previous close.

Similar movements can be seen with the Two-Year yield, which is now at 3.44%. However, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -33 basis points.

Pre-Market Update

U.S. stock futures dipped on Monday morning as investors gauged Friday’s update from Federal Reserve Chairman Jerome Powell.

Futures on the Dow Jones Industrial Average (DJIA) moved 0.85% lower, while those on the S&P 500 (SPX) lost 0.98%, as of 5.37 a.m. EST, Monday. Meanwhile, the Nasdaq 100 (NDX) futures dipped 1.23%.

Any hopes of the Fed’s pivot from its hawkishness were dashed on Friday when Powell reinforced the Fed’s stance. Now that July’s inflation data came below expectations, many were hoping that the Fed would ease its policy. However, Powell did not mince his words while reinstating that more aggressive interest rate hikes are on the way this year and that the central bank will not depend on a month or two of positive inflation data.

Now, investors are left to second-guess the effects of more rate hikes on the economy’s health. Once again, investors are reassessing their positions and pulling out of risky bets. Being most sensitive to interest rates, the technology sector was hit the hardest.

Wall Street was overwhelmed on Friday, even as experts had warned that it might be too early for the Fed to pivot. The global crypto market cap dropped around 2% over the last day with Bitcoin falling below $20,000. Moreover, by the end of Friday’s regular trading, the S&P 500, the Dow, and the Nasdaq 100 had fallen sharply by 3.37%, 3.03%, and 4.1%, respectively, wiping out the gains accrued in the August rally.

Moreover, bond yields rose, putting further pressure on the equity market (the bond and stock markets move inversely). The yield on the 2-year Treasury note climbed 0.062% to hit 3.454%, the highest yield since November 2007.

This week awaits August’s nonfarm payrolls data, which will be revealed on Friday. This report will give us more insights into how the labor market is navigating inflation and rising interest rates. So far, most data linked to the labor market have indicated resilience.

Investors are also looking forward to initial jobless claims on Thursday, giving more information on the unemployment situation of the economy. On the brighter side, claims for unemployment benefits reduced to 243,000 in the week ended August 19 from the preceding week’s 245,000.

Also, it was revealed that the U.S. GDP had contracted at a slower pace in the second quarter than initially estimated. The GDP in the June-end quarter declined 0.6% year-over-year instead of the 0.9% reported earlier.


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