Stocks slide after weak economic data as 10-year yield falls below 4%

By Investor Empires On Aug 1, 2024

U.S. stocks fell on Thursday as weak economic data weighed, despite better-than-expected META results and hints from the Federal Reserve that it could cut interest rates in September.

The S&P 500 (^GSPC) fell about 1%, while the Nasdaq Composite (^IXIC) erased earlier gains to drop more than 1% after closing with big gains on Wednesday. The Dow Jones Industrial Average (^DJI) fell about 500 points, or 1.3%.

The yield on the 10-year US Treasury note (^TNX) fell below 4% for the first time since February, hovering around 3.98%.

The latest data from the Institute for Supply Management released on Thursday showed that the U.S. manufacturing sector sank deeper into contraction territory in July. Other data showed jobless claims rose to an 11-month high last week and construction spending unexpectedly fell in June.

The readings reflected a slowdown in the US economy, which renewed concerns about the risk of interest rates rising to historic levels, which could push it towards recession.

Stocks initially rose after Federal Reserve Chairman Jerome Powell boosted market confidence in a September rate cut, saying it “may be on the table.” Traders are mostly expecting a 25 basis point cut, but Raised bets At a 50 basis point move after policymakers kept interest rates steady.

Read more: 32 Charts That Tell the Story of Today’s Markets and Economy

The market now awaits the release of the July jobs report next Friday, which is being closely watched for further evidence of a slowdown that could shape Federal Reserve policy.

Meanwhile, investors are awaiting quarterly results, particularly from big tech companies, after Meta’s strong report late Wednesday. Shares of the Facebook-owner pared an earlier 8% rally as the market priced in its earnings and signs that strong digital ad revenue will give its investments in artificial intelligence time to pay off.

After-market earnings from Apple (AAPL) and Amazon (AMZN) could test Meta’s bullishness in the tech sector. It will also test the chances of the AI business delivering on its promise, which was hit hard by disappointing earnings from Magnificent Seven earlier.

He lives8 updates

Thursday, August 1, 2024 at 12:20 PM EST

Mortgage rates fall to lowest since early February after Fed hints at possible rate cut

Mortgage rates fell to their lowest level since early February after the Federal Reserve paved the way for a rate cut in September.

The average interest rate on a 30-year fixed mortgage fell to 6.73% from 6.78% the previous week, Freddie Mac Report Thursday. A year ago, the average interest rate on a 30-year fixed loan was 6.9%.

Separately, the average interest rate on a 15-year fixed mortgage was 5.99%, down from 6.07% the week before. The interest rate on a 15-year loan was 6.25% a year ago.

The data release came a day after the Federal Reserve kept interest rates steady at its July policy meeting, but signaled it was closer to cutting rates. She also noted “some further progress” on inflation.Federal Reserve Chairman Jerome Powell told reporters that a September rate cut “may be on the table.”

The drop is a welcome relief for potential homebuyers struggling to afford their homes. Home prices hit another record high in May.

“Expectations of a Fed rate cut coupled with signs of slowing inflation bode well for the market, but consumer confidence concerns could prevent an immediate rally as affordability challenges remain top of mind,” Sam Khater, chief economist at Freddie Mac, said in a statement. “However, the recent slowdown in home price growth and increased housing inventory are welcome signs for potential homebuyers.”
Thursday, August 1, 2024 at 12:06 PM EST

Nasdaq, S&P 500 fall as tech stocks slide

The Nasdaq and S&P 500 fell on Thursday as technology and energy stocks led the declines.

The S&P 500 Technology Sector ETF (XLK) fell more than 2%. Nvidia (NVDA) shares fell more than 3%, along with other chip stocks.

The energy sector (XLE) also fell more than 2%. Interest-rate-sensitive stocks like real estate (XLRE) and utilities (XLU) rose during the session.

The S&P 500 (^GSPC) fell about 1%, while the tech-heavy Nasdaq Composite (^IXIC) also fell more than 1.4%. The Dow Jones Industrial Average (^DJI) fell about 500 points.

The shift in the major averages occurred mid-morning, erasing gains earlier in the session after the 10-year US Treasury yield (^TNX) moved below the 4% level to hover near 3.98% for the first time since February.

The move in bonds came a day after Federal Reserve Chairman Jerome Powell hinted at a September interest rate cut. Weak manufacturing data from the Institute for Supply Management and a rise in jobless claims released on Thursday pointed to signs of a slowing economy.
Thursday, August 1, 2024 at 11:37 AM EST

Semiconductor stocks fall as Nasdaq drops 1%

Semiconductor stocks fell on Thursday as major averages retreated, erasing early morning gains.

Shares of artificial intelligence chip giant Nvidia (NVDA) fell more than 2% after gaining about 13% in the previous session. Shares of Broadcom (AVGO) and SML (ASML) also fell more than 4%.

Chip markets ignited Wednesday after AMD (AMD) posted better-than-expected results and Microsoft (MSFT), a company that buys artificial intelligence chips, said it had increased capital spending on its data center infrastructure.

Chip stocks are falling, giving back some of the gains they made in the previous session.
Thursday, August 1, 2024 at 11:02 AM EST

Stocks fall as weak economic data points to slowing economy

Stocks erased early morning gains, sinking into the red as the yield on the 10-year U.S. Treasury note (^TNX) fell below 4% for the first time since February.

The S&P 500 (^GSPC) fell 0.7%, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.9%. The Dow Jones Industrial Average (^DJI) fell 0.9%.

As Yahoo Finance’s Josh Schafer notes, the U.S. manufacturing sector sank into contraction territory in July. BMI manufacturing The manufacturing purchasing managers’ index came in at 46.8 in July, down from June’s 48.5 and below the 48.5 economists had forecast, according to Bloomberg data.

Meanwhile, weekly unemployment claims rose again more than expected last week, in the latest sign of a slowing labor market.

The move lower in stocks comes after a strong rally on Wednesday following comments from Federal Reserve Chairman Jerome Powell at the end of the central bank’s two-day policy meeting. Powell paved the way for a possible interest rate cut in September.
Thursday, August 1, 2024 at 10:26 AM EST

US 10-year Treasury yield falls below 4% for first time since February

On Thursday, the yield on the 10-year US Treasury note (^TNX) moved below the 4% level to hover around 3.98% for the first time since February.

The move comes a day after Federal Reserve Chairman Jerome Powell said a September interest rate cut was “on the table.”
Thursday, August 1, 2024 at 10:06 AM EST

US manufacturing sector enters deeper contraction

The US manufacturing sector continued to slide into contraction territory in July.

International Solidarity Movement BMI manufacturing The manufacturing purchasing managers’ index came in at 46.8 in July, down from June’s 48.5 and below the 48.5 economists had forecast, according to Bloomberg data. The reading was the lowest since November 2023.

A reading above 50 for this indicator indicates an expansion in activity, while a reading below 50 indicates a contraction.

“Demand remains weak, with businesses showing an unwillingness to invest in capital and inventory due to current federal monetary policy and other conditions,” said Timothy Fiore, president of the Institute for Supply Management. He said in a statement:
Thursday, August 1, 2024 at 9:31 AM EST

Stocks open higher after Fed decision, Meta jumps 8%

Stocks opened higher on Thursday, building on the previous session’s rally after the Federal Reserve laid the groundwork for a September interest rate cut and Facebook parent Meta reported better-than-expected earnings.

The S&P 500 (^GSPC) rose 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) gained about 0.5%. The Dow Jones Industrial Average (^DJI) also rose 0.4%.

Stocks rose after Federal Reserve Chairman Jerome Powell said on Wednesday that a September interest rate cut “may be on the table.”

Meta shares rose about 8% after a strong quarterly report from the social media giant. Like other big tech companies, Meta said it expects “significant” capital spending growth in 2025 as it builds out its AI-focused infrastructure.
Thursday, August 1, 2024 at 9:06 AM EST

Unemployment claims rise more than expected

Weekly unemployment claims rose more than expected again last week, in the latest sign of a slowing labor market.

New data from Ministry of Labor Initial claims for state unemployment benefits totaled 249,000 for the week ended July 27, up from 235,000 the previous week and above the 235,000 economists had forecast, the Labor Department said on Monday. That was the highest weekly level since August 2023.

Meanwhile, the number of continuing applications for unemployment benefits once again reached its highest level since November 2021, with 1.877 million applications filed in the week ending July 20, up from 1.84 million the previous week.

“The jobless claims data over the past few weeks have been pointing to a gradual weakening in the labor market, albeit from a position of strength,” Thomas Simons, a U.S. economist at Jefferies, wrote in a note on Thursday. “This is another step in the labor market’s process of better balancing, but we should remain vigilant in watching for signs of recession. We are particularly concerned about the negative impulse in the labor market data, but things could deteriorate quickly once they start.”