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U.S. Stocks Fluctuate Before Closing Firmly Negative

wallstreet aug15 15sep22 lt

Stocks fluctuated over the course of the session on Thursday before coming under considerable pressure in the latter part of the session. The Dow and the S&P 500 more than offset Wednesday's gains, falling to their lowest closing levels in two months.

The major averages climbed off their worst lows of the session going into the close but remained firmly negative. The Dow slid 173.27 points or 0.6 percent to 30,961.82, the Nasdaq tumbled 167.32 points or 1.4 percent to 11,552.36 and the S&P 500 slumped 44.66 points or 1.1 percent to 3,901.36.

The volatility and subsequent lower close on Wall Street came as traders sought the assess whether the substantial batch of U.S. economic data released this morning will have an impact on the Fed's interest rate decision.

The slew of data included a report from the Commerce Department showing an unexpected increase in retail sales in the month of August, although the sales growth followed a revised decrease in July.

The report showed retail sales rose by 0.3 percent in August following a revised 0.4 percent decrease in July. Economists had expected retail sales to come in unchanged, matching the unchanged reading originally reported for the previous month.

Excluding a rebound in auto sales, retail sales fell by 0.3 percent in August following a revised unchanged reading in July.

Ex-auto sales were expected to inch up by 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.

A separate report released by the Labor Department unexpectedly showed another modest decrease in first-time claims for U.S. unemployment benefits in the week ended September 10th.

The Labor Department said initial jobless claims slipped to 213,000, a decrease of 5,000 from the previous week's revised level of 218,000.

Economists had expected jobless claims to inch up to 226,000 from the 222,000 originally reported for the previous week.

With the unexpected dip, jobless claims fell to their lowest level since hitting 202,000 in the week ended May 28, 2022.

Meanwhile, the Labor Department released a report showing a continued decrease in U.S. import prices in August, potentially helping offset recent inflation concerns.

The Labor Department said import prices slid by 1.0 percent in August after tumbling by a revised 1.5 percent in July.

Economists had expected import prices to decrease by 1.2 percent compared to the 1.4 percent slump originally reported for the previous month.

The report also showed export prices dove by 1.6 percent in August after plummeting by a revised 3.7 percent in July.

Export prices were expected to decline by 1.1 percent compared to the 3.3 percent plunge originally reported for the previous month.

However, the Federal Reserve also released a report unexpectedly showing a modest decrease in U.S. industrial production in the month of August.

The report said industrial production edged down by 0.2 percent in August after climbing by a downwardly revised 0.5 percent in July.

Economists had expected industrial production to inch up by 0.2 percent compared to the 0.6 percent increase originally reported for the previous month.

"The latest round of data suggest the Fed can stick to aggressive rate hikes as the labor market remains strong and as the economy slowly softens," said Edward Moya, senior market analyst at OANDA.

He added, "The risks of the Fed sending the economy into a severe recession are growing but right now the data doesn't support that argument."

Sector News

Gold stocks moved sharply lower over the course of the session, resulting in a 3.1 percent nosedive by the NYSE Arca Gold Bugs Index.

The sell-off by gold stocks came amid a steep drop by the price of the precious metal, with gold for December delivery tumbling $31.80 to $1,677.30 an ounce.

A sharp pullback by the price of crude oil also weighed on energy stocks, dragging the NYSE Arca Oil Index and the Philadelphia Oil Service Index down by 2.9 percent and 2.8 percent, respectively.

Utilities, networking and commercial real estate stocks also saw significant weakness, while banking stocks held on to strong gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index edged up by 0.2 percent, while China's Shanghai Composite Index slumped by 1.2 percent.

Meanwhile, European stocks moved mostly lower on the day. While the U.K.'s FTSE 100 Index bucked the downtrend and inched up by 0.1 percent, the German DAX Index fell by 0.6 percent and the French CAC 40 Index slumped by 1.0 percent.

In the bond market, treasuries moved to the downside after fluctuating early in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.7 basis points to 3.459 percent.

Looking Ahead

Following today's avalanche of data, the economic calendar is relatively quiet on Friday, although a preliminary reading on consumer sentiment in September may attract some attention.

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