Nasdaq and S&P 500 Trim August Losses After 4-day Rally

Barry Adams
30 Aug, 2023
New York City

Popular averages closed higher for the fourth day in a row as investors debated rate path after additional economic data. 

On Wall Street advanced for the fourth day in a row and investors reviewed private sector payrolls and second quarter economic revision data. 

Market sentiment was positive for the fourth day and tech stocks led gainers after investors reviewed the second jobs report in as many days. 

The cooling trend in the job market reported by the JOLT report from the government was confirmed by the private sector payrolls data Wednesday. 

Private sector payrolls expanded 177,000 in August, sharply lower than and downwardly revised 371,000 in July, the monthly survey released by ADP showed Wednesday.  

ADP monthly data is far less reliable because of its inherent volatility and sharp revisions, but still the report confirmed its cooling job market trend after twelve rate hikes from the Federal Reserve over the last sixteen months. 

Investors also reviewed the downward revision of the second quarter economic growth estimate. 

Despite the recent market gains for the second week in a row, the Nasdaq Composite is down 2.3% in August and the S&P 500 index and the Dow Jones Industrial are down around 1.5%.  

 

U.S. Q2 GDP Growth Rate Revised Lower 

The second quarter U.S. economic growth was revised lower primarily reflecting adjustments in inventories, the U.S. Bureau of Economic Analysis said Wednesday. 

The U.S. economy expanded at an annualized 2.1% in the second quarter, revised from the preliminary rate of2.4% and down from the first quarter's expansion of 2.0%, the statistical agency said in its second estimate. 

Private inventory investment and nonresidential fixed investment were downwardly revised, and partly offset by an upwardly revised state and local government spending.

 

U.S. Indexes & Yields 

The S&P 500 index traded up 0.4% to 4,514.87 and the Nasdaq Composite gained 0.5% to 14,019.31. 

The yield on 2-year Treasury notes decreased to 4.89%, 10-year Treasury notes inched lower to 4.12% and 30-year Treasury bonds edged down to 4.23%. 

West Texas Intermediate crude oil and Brent crude oil prices hovered near the levels last seen In April after a larger-than-expected weekly drawdown of weekly crude supplies last week. 

Crude oil decreased $0.57 to $81.73 a barrel and natural gas prices increased 14 cents to $2.81 a thermal unit.

 

U.S. Stock Movers 

Hewlett Packard Enterprise Company declined 3.2% to $16.29 after the company reported mixed quarterly results. 

Revenue in the fiscal third quarter was $7 billion and adjusted earnings per share was 7 cents.  

HP Inc fell 9.9% to $28.37 after the maker of personal computers and digital devices and systems reported weaker-than-expected fiscal third quarter revenue of $13.2 billion and adjusted earnings per share of 86 cents.  

Insulet Corporation increased 4.8% to $198.91 after chief executive James Hollingshead reported purchasing of 5,500 shares in the medical device maker.  

On Monday, the company announced the launch of the insulin delivery system Omnipod 5 in its third largest market Germany. 

Box Inc dropped 8.9% to $27.77 after the cloud storage company reported mixed quarterly results. 

PVH Corp rose 1% to $80.99 after the owner of several apparel brands including Calvin Klein reported strong quarterly results. 

The apparel maker reported quarterly revenue increased to $2.21 billion and adjusted earnings per share to $1.98. 

The company also lifted its full-year earnings per share and revenue outlook.  

 

European Markets On Backfoot 

European markets struggled after two days of gain and new inflation data weighed on the market sentiment. 

Market indexes lacked direction in London, Paris and Frankfurt after inflation rebounded in Spain and some German states. 

Spain's consumer inflation accelerated to 2.6% in August from 2.3% in July,  National Statistics Institute reported Wednesday. 

Investors have been cautious amid worries of hawkish stance from the European Central Bank and looming global slowdown following the uneven economic recovery in China and cooling job market in the U.S. 

 

EU Passenger Car Sales Rose In July, Battery Share Expanded 

Passenger vehicle sales in the European Union continued to increase for the twelfth month in a row, the European Automobile Manufacturers Association reported Wednesday.  

New car registration increased 15.2% to 851,200 units in July after supply chain disruptions eased and production picked up. 

Sales in four largest markets in the region rose as customers showed willingness to buy vehicles despite higher prices.

Passenger vehicle registration in France rose 19.9%, in Germany advanced 18.1%, Spain jumped 10.7% and Italy increased 8.7%. 

Battery powered vehicles garnered a larger share of the total and sales increased to 13.6% from 9.8% a year earlier. 

In the first seven months between January and July 2023, passenger vehicle sales increased 17.6% to 6.3 million. 

Despite the sustained recovery over the last two years from the pandemic-era related supply disruption,  sales in the seven-month period were 22% lower than in 2019.

 

Europe Indexes & Yields

The DAX index decreased 0.3% to 15,891.93, the CAC-40 index declined 0.1% to 7,364.40 and the FTSE 100 index advanced  0.1% 7,473.61.

The yield on 10-year German bonds decreased to 2.58%, French bonds traded lower to 3..10%, the UK gilts edged down to 4.45% and Italian bonds fell to 4.23%.

The euro edged to the lowest level since mid-June on the hopes that the central is more likely to pause its rate hike campaign and assess the impact of the multiple rate hikes on the economy. 

The euro edged lower to $1.089, the British pound to $1.266 and the U.S. dollar fetched 87.94 Swiss cents.

Brent crude increased $0.22 to $85.70 a barrel and the Dutch TTF natural gas decreased €0.82 to €35.99 per MWh.

 

Europe Stock Movers

Prudential Plc increased 3.3% to 1,017.50 pence after the British insurance company said first-half operating profit increased 6% to $1.46 billion. 

Adjusted net profit rebounded to $947 million compared to a loss of $1.5 billion in the previous year, as the insurance company sold more insurance products to mainland Chinese visitors in Hong Kong.

Sales of new insurance products soared 39% to $1.5 billion after sales in Indonesia  advanced 42%, Africa 31%, Philippines 13% and   Malaysia 12% but declined 5% in Singapore and 18% in Vietnam. 

The company increased its interim dividend by 9% to 6.26 U.S. cents. 

Instem Plc soared 40% to 825.0 pence after the UK-based software company agreed to be acquired by the U.S.-based private equity firm. 

Orsted AS dropped 24% to DKK 424.80 after the Danish renewable energy firm issued an impairment alert of up to DKK 5 billion (or $730 million) in its U.S. portfolio.   

Direct Line Insurance Group Plc decreased a fraction to 160.70 pence after the home and automobile insurer announced the appointment of Adam Winslow, a senior executive at rival Aviva. 

Delivery Hero SE dropped 7.4% to €33.12 after the online food delivery service company reported operating and net loss in the first-half.