Tuesday, August 31, 2021
Dow Jones closes in the red
Wall Street takes a breather
Wall Street is pausing after its recent record hunt. The most important indices closed slightly in the red. Overall, however, the mood on the stock market remains quite good after US Federal Reserve Chairman Powell recently reassured investors.
The major US stock indices have seen mini losses, consolidating recent gains. It was only on Monday that the S&P 500 and the Nasdaq Composite set new record highs. Of the Dow Jones-Index closed 0.1 percent lower at 35,361 points. Of the S&P 500 also lost 0.1 percent, and the Nasdaq composite tended to change little. According to initial information, there were 1,723 (Monday: 1,431) course winners and 1,585 (1,875) losers at Nyse. 141 (121) titles went unchanged from the market.
New economic data gave cause for caution. Both the Chicago purchasing managers index and consumer confidence, both for August, were weaker than expected. However, this also mitigated concerns about the impending monetary policy turn towards tightening.
After all, cheap central bank money still provides support. During his appearance in Jackson Hole on Friday, US Federal Reserve Chairman Jerome Powell signaled that the Fed was in no hurry to tighten the reins of monetary policy.
The spreading delta variant of the coronavirus fueled economic worries, but at the same time turned the attention of investors on the stock market back to the beneficiaries of the previous pandemic waves. These are mainly companies from the technology sector, whose stocks had suffered from the rise in market interest rates, but could now benefit from people spending more time at home again.
Delta and “Ida” as a brake on the economy
Meanwhile, investors were worried about Hurricane Ida, which could cause economic damage of an estimated 16 billion dollars, said Joe Brusuelas, chief economist at RSM US. He is not only looking at the destruction caused by the hurricane, but also the consequences such as higher energy prices and interruptions in the supply chain. “Ida” will reduce the US gross domestic product in the current quarter by 0.2 percent, the economist expects.
Broke among the individual values zoom by 16.7 percent. The provider of solutions for video conferencing gave a rather pessimistic outlook on the Monday after the stock market closed when presenting figures. It went up by 1.6 percent Robinhood Marketsafter the stock had taken a lot of feathers the day before. The US Securities and Exchange Commission is investigating the online broker’s business model and could drain an important source of income. Robinhood forwards its customers’ securities trading orders to so-called high-speed traders and receives fees from them, which in turn make up the lion’s share of its own turnover.
This practice has been legal to date and has been in place for decades, but has been targeted by the SEC after individual stocks like Game stop (+ 4.3%) had seen drastic price fluctuations over the course of the year, most of which were fueled by private investors on social media. The SEC is now considering a ban.
Johnson & Johnson tended to be 0.3 percent lighter. An HIV vaccine from the pharmaceutical company has proven ineffective in a clinical study. The development of the vaccine will therefore be discontinued, according to the company.
Dollar hardly changed
Of the Euro gave up higher daily gains and held up well. The dollar index hardly changed. According to Commerzbank, this week will be for the dollar difficult. The upcoming US economic data, especially the labor market report for August on Friday, are unlikely to be so good that the Fed will take the decision sooner rather than later to taper, i.e. to reduce its bond purchases. Should the market be disappointed, the dollar could collapse.
Oil prices trended lighter. Here market participants referred to the decreasing strength of Hurricane “Ida”. The oil industry in the state of Louisiana could be up and running shortly. The OPEC conference on Wednesday should become a non-event, it said. The majority of the analysts expect that OPEC will increase the production volume as planned.