U.S. and Global Markets Decline as Worldwide Slump Deepens

Barry Adams
23 Aug, 2022
New York City

Stocks on Wall Street extended losses for the third day as bond yields rose and energy prices advanced and private sector activities fell sharply in Europe and Japan. 

Global economies are slowing down as private sector battles supply disruptions and rising input costs, consumers are struggling with sky-high inflation and record higher energy and food prices and government finances are stretched. 

In addition China, the second largest economy in the world, is facing heat waves for three months in a row in  the southern region on top of lockdown conditions in the central and northern regions. 

Crude oil prices surged more than 3% and natural gas prices hovered near $10 level as divisions between Russia and the European Union deepened. 

The U.S. Treasury yields also rose and traded near the 3.0% mark for 10-year notes after new home sales plunged 12.6% in July. 

Investors are awaiting hawkish comments from the Fed Chairman Jerome Powell on Friday as central bankers gather for three days at an annual economic symposium in Jackson Hole, Wyoming. 

The Economic Policy Symposium is scheduled to commence on August 25 and convened by the Federal Reserve Bank of Kansas City. 

At the last year's gathering, Fed Chair Powell labeled the latest bout of inflation as "temporary" and "transitory" and highlighted the slack in labor markets. 

The wildly wrong assessment of the inflation has forced the Fed to play catch up as inflation surges to a four-decade high driven by soaring energy and food prices and persistent supply chain disruptions. 

 

New Home Sales Plunge 

New home sales declined to an annual rate of 511,000 in July from the revised 585,000 sales in June, the Census Bureau reported on Tuesday.  

From a year ago, new home sales plunged 29.6% after home prices continue to advance. 

The median price for a newly-built home increased to $439,400, up from $402,400 in the prior month.

Investors are awaiting hawkish comments from the Fed Chairman Jerome Powell on Friday as central bankers gather for three days at an annual economic symposium in Jackson Hole, Wyoming. 

The Economic Policy Symposium is scheduled to commence on August 25 and convened by the Federal Reserve Bank of Kansas City. 

At the last year's gathering, Fed Chair Powell labeled the current bout of inflation as "temporary" and "transitory" and highlighted the slack in labor markets. 

The wildly wrong assessment of the inflation has forced the Fed to play catch up as inflation surges to a four-decade high driven by soaring energy and food prices and persistent supply chain disruptions. 

 

Indexes Commodities, Yields 

The S&P 500 index fell 0.2% to 4,124.97 and the Nasdaq Composite index dropped a fraction to 12,376.02. 

Futures of crude oil prices rose $3.31 to $93.64 a barrel and natural gas decreased 39 cents to $9.28 a thermal unit. 

The yield on 10-year Treasury notes reversed the earlier decline to rise to 3.04% and on two-year notes rose to 3.29%. 

In trading, stocks attempted a rebound in the morning but lacked enthusiasm ahead of the Fed comments. 

 

Movers: Dick's Sporting, Macy's, Medtronic, Palo Alto Networks, Zoom Video, Twitter  

Dick's Sporting Goods Inc increased 1.3% to $112.81 after the sporting goods retailer said comparable store sales declined less than anticipated 5.1%, after rising 20.2% in the quarter a year ago. 

The retailer sales in the quarter fell 5% to $3.1 billion and net income plunged 35.7% to $318.5 million. 

Dick's Sporting Goods lifted its comparable sales range for the full-year to a decline between 2% and 6% from the previous estimate of a fall between 2% and 8%. 

Macy's Inc increased 3.5% to $19.30 after the retailer reported better-than-anticipated quarterly results but offered a cautious outlook for the year. 

Comparable sales at the company owned stores declined 1.5% and diluted earnings per share fell to 99 cents from $1.09 a year ago. 

Comparable sales rose 4.3% on a two-year basis or compared to the second quarter in 2019. 

Net sales were flat at $5.6 billion but earnings declined to $275 million compared to $345 million a year ago. 

Macy's tightened annual sales outlook to range between $24.34 billion and $24.58 billion compared to the previous estimate between $24.46 billion and $24.70 billion. 

Medtronic PLC declined 2.9% to $90.34 after the medical products maker said revenues in the fiscal year 2023 first quarter ending on July 29 declined 8% to $7.4 billion. 

Revenues were impacted by persistent supply chain disruptions. 

Net income in the quarter increased to $929 million or 70 cents a share from $763 million or 57 cents a share a year ago.  

Palo Alto Networks soared 11.9% to $569.09 after the cyber security company reported better-than-expected quarterly results.

The company also announced that the board has approved a 3-for-1 stock split. 

Zoom Video Communications plunged 16% to $81.88 after the company reported stronger-than-expected quarterly earnings but lowered its annual revenues estimate. 

Twitter Inc declined 6.5% to $40.22 after a whistleblower filed a complaint with the Department of Justice, Federal Trade Commission, and Securities and Exchange Commission. 

Peiter Mudge Zatko, the former securities head of Twitter, alleged that the social  media operator is suffering from