Aug 9 (The Street Press) – Following a report indicating record-high credit card borrowing in the past quarter, U.S. stocks concluded in the red on Wednesday. This came just a day before the release of the U.S. Consumer Price Index (CPI) inflation data, which has the potential to impact decisions on Federal Reserve interest rates.
“The markets today are just kind of waffling around. And the reason for that is tomorrow is going to be the CPI report for July being released”, Jason Krupa, who holds the position of Vice President of Asset Management at Lenox Advisors, remarked.
The New York Federal Reserve Bank reported on Tuesday that U.S. credit card debt had exceeded $1 trillion. Additionally, Patrick Harker, the President of the Philadelphia Fed, mentioned that the U.S. central bank might have reached a point where keeping interest rates steady is feasible.
“With price of oil going up, the consumer is the backbone of the economy. If they are too stretched and they stopped spending, that feeds us more into a recession narrative”, Gina Bolvin, serving as the President of Bolvin Wealth Management Group in Boston, commented.
According to the CME FedWatch Tool, traders assigned an 86.5% probability of no rate hike during the upcoming Federal Reserve policy meeting in September. Stocks of large growth and technology companies, which have been driving the Wall Street surge, including Nvidia, Apple, and Tesla, experienced declines ranging from 0.8% to 4.8%.
Expected to be released on Thursday, the Consumer Price Index (CPI) for July is anticipated to exhibit a minor uptick compared to the previous year. Month-on-month, there’s an estimated 0.2% rise in consumer prices, mirroring the increase observed in June.
In July, China’s consumer sector experienced deflation as indicated by a drop in the consumer price index (CPI), according to the National Bureau of Statistics. This marks the first decrease since February 2021 in the world’s second-largest economy.
The Dow Jones Industrial Average declined by 191.13 points, equivalent to 0.54%, closing at 35,123.36. Simultaneously, the S&P 500 experienced a decrease of 31.67 points, or 0.70%, settling at 4,467.71. The Nasdaq Composite also saw a drop of 165.93 points, constituting a 1.2% decline, and concluding at 13,718.40.
Continuing from a widespread sell-off on Tuesday due to credit rating agency Moody’s downgrading various small and mid-sized banks, larger banks extended their declines on Wednesday. Bank of America experienced a 0.8% drop, while Wells Fargo recorded a 1.3% decrease.
Among the top 11 sectors in the S&P 500, four sectors demonstrated gains, with energy stocks taking the lead with a significant 1.22% increase. This rise brought them to a nearly six-month peak, aligning with the surge in crude oil prices.
Shares of casino owner Penn Entertainment experienced a remarkable 9.1% surge following a $2 billion agreement with Walt Disney’s ESPN to establish a sports betting enterprise.
Walt Disney’s shares saw a decline of 0.7%, eliminating initial gains as they approached their quarterly results announcement.
Despite a positive earnings forecast, Lyft shares plummeted by 10%. The company’s intention to intensify competitive pricing to keep pace with rival Uber contributed to the decline.
Out of the 443 S&P 500 firms that disclosed their results by Tuesday, a substantial 78.6% surpassed the expectations set by analysts, as reported by Refinitiv data.
Jason Krupa commented, “It could be a little bit of that (the market is ) digesting the fact that we’re beating expectations (on earnings) but those expectations have been coming down quarter over quarter.”
Trading activity on U.S. exchanges involved 11.06 billion shares, contrasting with the 10.89 billion average seen across the complete session over the preceding 20 trading days.
On the NYSE, there were more declining issues compared to advancing ones, with a ratio of 1.18-to-1. Similarly, on Nasdaq, decliners were favored with a ratio of 1.63-to-1.
In terms of new price levels, the S&P 500 achieved 16 new 52-week highs and observed 7 new lows. Meanwhile, the Nasdaq Composite marked 60 new highs and experienced 178 new lows.