Market Recap
Stocks experienced declines on Thursday as investors absorbed the latest earnings reports and economic indicators, coupled with a rise in interest rates. The Dow Jones Industrial Average saw a dip of 307 points, or 0.9%, while the S&P 500 and the Nasdaq Composite fell by 0.9% and 1.2% respectively. This marks the third consecutive day of losses, and interest rates reached their highest level since October 2022 after the release of the Federal Reserve’s July meeting minutes, revealing ongoing concerns about inflation.
Company Highlights: Walmart’s shares dropped over 2%, despite beating earnings and revenue expectations in its fiscal second quarter. The company raised its full-year guidance and highlighted robust performance in grocery and online sales. On a positive note, Cisco Systems, a computer networking company, gained nearly 4% following a stronger-than-expected quarterly earnings report.
August’s Challenges: August has proven challenging for the market, with major averages heading towards another week of losses and the month reflecting negative performance. The broad market index has experienced a decline of over 4% during August. Commonwealth Financial Network portfolio manager Chris Fasciano noted the anticipated caution after a strong first half, suggesting that the current pullback could ultimately benefit the market’s health.
Economic Indicators: Jobless claims for the week ending Aug. 12 declined from the previous period and slightly surpassed Dow Jones estimates. Additionally, the Philadelphia Federal Reserve reported an increase in its manufacturing index for August.
Oil Price Trends: Derivatives traders have demonstrated bearish sentiment towards oil prices, betting on further declines. Barclays’ strategist Stefano Pascale highlighted elevated put-to-call open interest ratio and steep skew in the USO (United States Oil Fund), which holds oil futures contracts. Despite a 1% increase on Thursday, the USO has still witnessed a week-to-date drop of 2.7%.
Please note that these observations and insights provide a snapshot of the recent market developments and trends.
Best regards,
Santiago
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