Today’s News
U.S. stocks closed lower on Wednesday, with the Nasdaq falling 1% due to a decline in technology shares and weak demand in a 10-year Treasury auction, which unsettled investors in a volatile trading session.
The indexes initially surged with gains in tech stocks but lost momentum in the afternoon. Investor jitters, exacerbated by a recent global stock selloff, caused equities to pare gains further following the Treasury auction.
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All three major indexes turned negative, with losses deepening before the close. The S&P 500 technology index dropped 1.4%, making it the biggest drag on the benchmark index.
“There’s just a lot to worry about over the next eight weeks or so, so I’m expecting more volatility. I wouldn’t be surprised if after a few days of rally you have another small selloff,” said Peter Tuz, president of Chase Investment Counsel.
Investor concerns include a possible U.S. recession and weaker forecasts from some major U.S. companies. The Dow Jones Industrial Average fell 234.21 points (0.6%) to 38,763.45, the S&P 500 lost 40.53 points (0.77%) to 5,199.5, and the Nasdaq Composite dropped 171.05 points (1.05%) to 16,195.81.
Lindsey Bell, chief strategist at 248 Ventures, noted that investors might be taking profits after Tuesday’s stock rebound.
“You don’t just have the fall we had on Monday and it’s done. You typically test the lows again before we can move out of this downtrend,” she said. On Monday, the Nasdaq and S&P 500 each fell over 3%.
Early support for stocks came from comments by Bank of Japan (BOJ) Deputy Governor Shinichi Uchida, who stated that the central bank would not raise rates during market instability. The BOJ’s surprise rate hike on July 31, to a level unseen in 15 years, had sparked a global stock rout as investors unwound yen carry trade positions following a surge in the low-yielding currency.
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Image Source: CNBC
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Walt Disney shares fell 4.5% after predicting a “moderation in demand” at its theme park business. Super Micro Computer shares dropped 20.1% due to quarterly adjusted gross margins falling below estimates, and rival Dell Technologies fell 4.9%.
Investors are looking forward to more commentary on monetary policy from U.S. central bank officials next week, ahead of the Jackson Hole, Wyoming, event where Fed Chair Jerome Powell is scheduled to speak.
Trading volume on U.S. exchanges was 12.93 billion shares, compared to the 12.63 billion average over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 1.48-to-1 ratio; on Nasdaq, a 2.08-to-1 ratio favored decliners. The S&P 500 posted 16 new 52-week highs and 9 new lows, while the Nasdaq recorded 34 new highs and 195 new lows.
Other News
Banco do Brasil Posts 8% Rise in Q2 Profit
State-controlled Banco do Brasil reported an 8.2% increase in second-quarter adjusted net profit, reaching 9.50 billion reais (USD 1.69 billion), slightly surpassing analyst expectations.
Yields Rise After Weak 10-Year Auction
U.S. Treasury yields climbed due to weak demand for a USD 42 billion sale of 10-year notes and increased corporate debt issuance. The 10-year notes sold at 3.96%, with demand at its lowest since December 2022.
BOJ Reassurance Fades, Volatility Looms
Asian markets brace for turbulence after a weak U.S. Treasury auction and rising market volatility overshadowed the Bank of Japan’s calming remarks. Key regional data releases will be closely monitored.
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