U.S. Stocks Close Slightly Weak As Investors Look For Direction

wallstreet sept18 01aug22 lt

After recording their best month in the Year in July, U.S. stocks turned in a sluggish performance on Monday, the first trading session of August, and ended slightly weak.

The mood in the market was quite cautious due to worries about a possible recession after data showed weakening factory activity in Asia and Europe. Data showing manufacturing activity in the U.S. rose at the weakest rate in nearly two years hurt as well.

Fairly encouraging corporate earnings updates helped limit market's downside.

In addition to digesting the latest batch of economic data, investors looked ahead to upcoming economic reports, including the crucial non-farm payroll data, due later in the week.

The major averages all ended in negative territory despite seeing a brief spell in positive territory. The Dow ended with a loss of 46.73 points or 0.14 percent at 32,798.40, after moving between 32,640.79 and 32,972.03.

The S&P 500 ended lower by 11.66 points or 0.28 percent at 4,118.63, while the Nasdaq settled at 12,368.98, down 21.71 points or 0.18 percent from the previous close.

Shares of energy firms drifted down after oil prices tumbled amid concerns about outlook for energy demand due to global economic slowdown. Bank stocks were weak as well.

Boeing shares climbed more than 6 percent on reports that the Federal Aviation Administration had approved the jet maker to restart deliveries of its 787 Dreamliner.

Procter & Gamble surged 2.25 percent, riding on fairly strong earnings updates. Intel ended stronger by about 1.8 percent. Home Depot and IBM were among the other notable gainers.

Chevron, Caterpillar, Travelers Companies, United Health and Merck drifted lower. Microsoft, JP Morgan, J&J, Nike and Goldman Sachs also closed weak.

In economic news, the S&P Global US Manufacturing PMI was revised slightly lower to 52.2 in July of 2022 from a preliminary of 52.3, pointing to the lowest factory growth since July of 2020.

The Institute for Supply Management said the ISM Manufacturing PMI edged lower to 52.8 in July of 2022 from 53 in June, beating market forecasts for a reading of 52. The reading pointed to a 26th straight month of rising factory activity but the weakest rate since June of 2020.

The ISM Manufacturing Employment sub index in the United States increased to 49.90 points in July from 47.30 points in June, compared with expectations for a reading 47.4.

The ISM Manufacturing New Orders sub index in the United States decreased to 48 points in July from 49.20 points in June of 2022.

Data from the Commerce Department showed construction spending in the US fell by 1.1 percent from the previous month to a seasonally adjusted annual rate of $1.76 trillion in June, compared to the revised 0.1 percent increase in May and market expectations of a 0.1 percent rise.

Other Markets

In overseas trading, Asian stocks ended broadly higher on Monday after key U.S. benchmark indexes finished July 2022 with the largest gains since 2020 on the back of better-than-expected earnings and easing concerns over the need for continued aggressive interest rate hikes by the U.S. Federal Reserve.

Chinese stocks fluctuated before ending slightly higher for the day. China's factory activity contracted unexpectedly in July, the National Bureau of Statistics said Sunday, with the corresponding PMI falling to 49 from 50.2 in June as a result of fresh COVID-19 outbreaks.

The non-manufacturing gauge, which measures activity in the construction and services sectors, dropped to 53.8 from 54.7, and overall property loans rose at the slowest rate on record as of the end of June -underlining the economic challenges facing the country.

Meanwhile, the Caixin/Markit manufacturing PMI eased to 50.4 from 51.7 in the previous month, adding to calls for more policy stimulus to fuel growth.

European stocks, which had their best month of the year in July, ended the first session of the new month on a weak note as weak data from China and the Euro area weighed on sentiment.

The pan European Stoxx 600 drifted down 0.19%. The U.K.'s FTSE 100 ended 0.13% down, France's CAC 40 ended lower by 0.18% and Germany's DAX edged down 0.03%.

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