Nasdaq and S&P 500 Down 1% On Rate Jitters

Barry Adams
26 Jul, 2022
New York City

Benchmark indexes traded lower ahead of the Fed's rate decision on Wednesday followed by the GDP data on Thursday.

The S&P 500 index declined 1.1% to 3,921.26 and the Nasdaq Composite index fell 1.9% to 11,569.95. 

Futures of crude oil declined $1.20 to $95.10 a barrel and natural gas rose 22 cents to $8.95 a thermal unit. 

Natural gas futures surged Russia controlled Gazprom throttled down gas flow to 20% of capacity of the Nord Stream 1. 

Separately, the EU member states agreed to lower natural gas consumption by 15% for the next eight months. 

Russia supplies about 40% of natural gas needs of the European Union 27 member states and alternative supplies from Norway, U.S., Qatar and Algeria are likely to fall far short of the region's needs. 

The yield on 10-year Treasury notes declined to 2.78% ahead of the Fed's rate decision tomorrow after a two-day meeting. 

Investors are looking for the Fed to raise between 50 and 75 basis points to stem the sky-high inflation hovering near 8.6% for the last two months. 

The inflation measure, Consumer Price Index, has been above the Fed's preferred target rate of 2% for the last 18 months in a row.   

Walmart Inc declined 7.9% to $121.62 after the retailer lowered its outlook for the fiscal year second quarter and said consumers are sticking to basic necessities because of high food and energy prices. 

The shifting consumer pattern is also forcing the retailer to mark down several items including apparel and other discretionary items. 

Shopify plunged 15.5% to $31.02 after the e-commerce platform operator announced a layoff of 10% or about 1,000 employees. 

3M increased 6.3% to $142.72 after the company reported better-than-expected earnings and said it plans to separate its healthcare unit as a separate independent company. 

General Electric increased 6.9% to $73.10 after the company reported higher earnings and cash flow on the recovery in its aviation engine business. 

General Motors declined 2.8% to $33.75 and the vehicle maker said June quarter revenues increased 4.6% to $35.8 billion and net income plunged 40% to $1.7 billion from $2.8 billion a year ago. 

The company blamed the earnings fall on China lockdown and parts shortages also prevented the automaker from shipping 100,000 vehicles. 

The vehicle maker said it has secured materials needed to make one million electric vehicles by 2025. 

General Motors guided full-year net income between $9.6 billion and $11.2 billion and adjusted operating earnings between $13.0 billion and $15.0 billion.

The company also guided full-year diluted earnings per share between $5.76 and $6.76 and adjusted earnings per share between $6.50 and $7.50.