Stocks slump after four consecutive weeks of S&P 500 gains
Energy leads declines
Energy stocks led the declines in early morning trading, with the sector down more than 4%.
Shares of names like Halliburton, Marathon Oil and Diamondback Energy slid more than 5% each.
Financials stocks Wells Fargo, Bank of America and Citigroup moved 1% lower. Materials also slumped 1%, with Nucor and Mosaic down more than 3% each. Freeport-McMoRan dropped 4.6%.
— Samantha Subin
Stocks open lower
Stocks opened lower on Monday, led by shares of energy and financials, which fell more than 3% and 1%, respectively. The Dow Jones Industrial Average slipped 169 points, or 0.5%, while the S&p 500 and Nasdaq Composite fell 0.46% and 0.23%, respectively.
— Samantha Subin
New York area manufacturing posts startling decline in August, survey shows
Manufacturing activity has collapsed in the New York area, according to a report released Monday.
The New York Fed’s Empire State Manufacturing Survey for August plunged to a reading of minus-31.3, a 42-point slide fueled by sharply lower new orders and shipments. The index measures the difference between businesses seeing expansion and contraction. Economists surveyed by Dow Jones had been looking for a reading of 5.
That was the lowest reading since May 2020 and both the second-lowest reading overall and the second-biggest plunge in history for a data series going back to July 2001. In addition to the massive decline in general conditions, the shipments index was minus-49.4 and the new orders index was minus-35.8.
Employment also remained mildly in expansion, with the index at 7.4, but that was a 10.6-point drop from July.
There was some hope for the future, as the index for general business conditions six months from now rose to 2.1, an 8.3-point gain.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, warned not to take too much away from the dismal report.
“As always, remember that the Empire State is a small regional survey and it is not definitive evidence of anything,” he wrote. “It is not a reliable indicator of the national ISM manufacturing index. We’re now very curious about the other regional reports for August, due over the next few weeks. Our bet is that none of them will be as startlingly terrible as this one.”
—Jeff Cox
Energy and technology set to open lower
Few stocks remained in positive territory in the premarket on Monday, with energy and technology leading those declines.
A drop in oil prices weighed down energy stocks as weak data from China, which is the world’s largest crude importer, spurred concerns of a slowdown.
Most technology names also remained in the red, led by shares of Apple, Microsoft and Amazon. Despite the downward trend, shares of Analog Devices rose about 2.7% in the premarket.
On the banking front, shares of Goldman Sachs, Bank of America and Morgan Stanley all moved about 1% lower.
— Samantha Subin
Stock futures slump
Stock futures slipped on Monday ahead of market open. Futures tied to the Dow Jones Industrial Average lost 224 points, or 0.66%, while S&P 500 and Nasdaq 100 futures shed 0.7% and 0.5%, respectively.
— Samantha Subin
Further pain lies ahead despite summer bounce, Canaccord Genuity says
A strong summer rally saw the S&P 500 bounce 16% from its June low but investors should refrain from chasing “whooshes” or “outsized rallies,” Canaccord Genuity says.
Highly oversold conditions and fears of both the Fed and an economic recession made a strong case for a summer rebound, analyst Tony Dwyer said in a note to clients Monday. That said, further uncertainty lies ahead and investors should look to cut back on increased risk brought on by the summer bounce.
“The strength of the summer rally has caused some momentum-based indicators to suggest the worst of the bear market is over, but the macro backdrop of yield curve inversions, real liquidity, and further Fed rate hikes argues the opposite,” he said.
— Samantha Subin
A ‘Goldilocks’ last few weeks
While the rally appears to be taking a pause Monday, the bulls have had quite a run of good news lately. At last check, the S&P 500 was up more than 17% from its mid-June low, cutting its loss for the year by more than half with the benchmark now down 10% for 2022.
Tavis McCourt, institutional equity strategist for Raymond James, summed it up this way in a note Sunday:
“An absolute ‘Goldilocks’ two weeks for those paying attention to economic data as last week’s ludicrously strong July jobs number was followed up by weaker than expected CPI, PPI (headline and core), export and import prices, sending the S&P 500 up another ~3.2% with small/mid-caps even more. As central bankers took to the airwaves to try to jawbone financial conditions tighter, equity markets continued their rally and credit spreads continued to tighten, as it seems likely inflation has peaked barring another dramatic supply disruption. We would note that in the post-WWII world of the 1940s, which we still think is the closest historical economic analogy to today, equities…
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