Wall Street Stocks Inch Lower, but Lock in Solid Gains in August

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Key Takeaways

• Equities slide on Tuesday but remain well-bid for August
• Traders and investors turn their focus to Friday’s jobs and unemployment data

Wall Street Stocks Slide on Tuesday

Wall Street stocks slipped broadly on Tuesday but finished the month of August with considerable gains, supported by elevated optimism, a strong earnings season, continued monetary stimulus, and government funding.

All three major US indexes declined yesterday as looming Delta strain concerns weighed on the market sentiment. In addition, mixed economic reports have cast a shadow over the pace of recovery, prompting investors to be more on the defense side.

Tuesday’s market performance finished in the red across the board with the S&P500 ending the session lower by 6.11 points, or 0.13%, to 4,522.68. The Nasdaq Composite slipped 6.65 points, or 0.04%, to 15,259.24. The Dow Jones Industrial Average edged lower by 39.11 points, or 0.11%, to close at 35,360.73.

The main US stock gauges float near their record highs set in August. The 30-stock Dow Jones drifted higher last month, gaining 1.2% for August and logging its second straight monthly advance. The S&P500 surged in August by adding 2.9% in its seventh consecutive month of gains. The broader market index registered its longest monthly winning stretch since January 2018, when the index pushed higher for 10 straight months.

Tech Companies Lag Behind

The tech-centered Nasdaq Composite was the best performer in August, gaining 4% for the month. Technology companies were largely lagging behind other sectors in previous months’ rallies when the reopening was swiftly spreading across the US.

While all three indexes notched multiple records in August, market participants had to digest a series of challenges, risks, and some disappointing data. Higher inflation expectations materialized in several reports, including a 5.4% increase in consumer prices for July from a year earlier. The Federal Reserve’s preferred measure of inflation, the core personal consumption expenditures index arrived at 3.6% in July, far outpacing the Fed’s target of 2%.

Federal Reserve Chairman Jerome Powell last week argued that signs of inflation will reverse as the economy reopens to a fuller extent. The Fed’s emerging plans to reduce bond purchases but keep interest rates at the same ultra-low levels assuaged investors and prompted a new wave of risk-hungry bargain hunting.

Later in the week, market participants will be looking to find out whether the US economy continues to grow. The jobs and unemployment reports for August are slated for release on Friday. Economists expect US employers to have added 720,000 jobs to the labor market. A month earlier, hiring in the US grew by 943,000 new jobs, the best gain in 11 months.

Overseas, European markets on Wednesday opened slightly higher, following yesterday’s modest losses. The region-wide Stoxx Europe 600 traded higher by over 0.6% early on Wednesday after it slipped 0.4% a day earlier to a closing level of 470.88.

Bitcoin has been under pressure today as its price gyrated near the opening level around $47,000 to $47,500. Ether, on the other hand, pushed to a new weekly high earlier in the day. The Ethereum token marked a three-month peak with its session high of $3,530, a level last seen on May 18.