Stocks Finish Wednesday’s Session in Positive Territory
Last Updated 4:25 PM EST
Stock indices finished today’s trading session in the green. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 gained 0.18%, 0.29%, and 0.28%, respectively. The technology sector was the session’s laggard, as it increased by 0.06%. Conversely, the energy sector was the session’s leader, with a gain of 1.23%.
Snowflake (SNOW) saw its shares surge in the after-hours session after a solid quarter that saw product revenue grow by 83% year-over-year. In addition, remaining performance obligations grew by 78%, while the net revenue retention rate was 171%.
Furthermore, the U.S. 10-Year Treasury yield increased to 3.11%, an increase of six basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 3.4%. This brings the spread between them to -29 basis points. The negative spread indicates that investors still have fears of a recession.
The Atlanta Federal Reserve updated its GDPNow reading, which allows it to estimate GDP growth in real-time. Currently, it estimates that the economy will see an annualized expansion of 1.38% in the third quarter after experiencing two consecutive quarters of decline.
However, it’s worth mentioning that this is down from last week’s estimate of 1.62%. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Therefore, it will be interesting to see if the estimate continues to fall, going forward. In the previous quarter, the estimate started off positive and eventually ended up correctly estimating a GDP decline by the end of Q2.
Because of this, investors should invest carefully, as we are not in the clear just yet.
Pending Home Sales Decrease During the Month of July
Last Updated 3:00PM EST
Stocks are in the green heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 0.1%, 0.2%, and 0.3%, respectively.
On Wednesday, the National Association of Realtors released its Pending Home Sales report, which measures the month-over-month change in the number of home sales that have yet to close but are contracted to be sold. This measure excludes homes that are newly constructed.
During July, Pending Home Sales fell by -1% compared to June, which was better than the expected -4% decline. This is on top of an 8.9% decline in the previous report. Of the eight reports issued in 2022, only one of them saw an increase.
In addition, the Pending Home Sales Index came in at 89.8, which is lower than the 110.5 reading from the same time last year. This equates to an approximate decline of 18.7% on a year-over-year basis.
As a result, the overall trend in sales is downwards, as the cost of borrowing continues to increase and more houses hit the market. This has also caused houses to sit for longer periods of time on the market because there are fewer buyers who now have more options to choose from.
Core Durable Goods Orders Come in Better Than Expected
Last Updated 12:00PM EST
Stocks are in the green halfway into Wednesday’s trading session. As of 12:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 0.5%, 0.6%, and 0.8%, respectively.
On Wednesday, the Census Bureau released its U.S. Core Durable Goods Orders report for the month of July, which measures the change in order value for long-lasting big-ticket items. This report excludes the impact of aircraft orders because they tend to be very volatile. Therefore, it is generally agreed upon that the core reading provides a better gauge of ordering trends.
For the month of July, Core Durable Goods Orders grew by 0.3%, which was better than the expected 0.2% on a month-over-month basis. This is the same result as the previous month and demonstrates that demand for big-ticket items is still there as consumers continue to spend. However, when including aircraft orders, growth remained flat at 0%, which missed expectations of 0.6%.
Nevertheless, it is important to remember that this is a lagging indicator, meaning that the current demand has the potential to be much lower as inflation continues to impact people’s purchasing power. Nonetheless, it appears that the market likes what it sees from today’s report.
Mortgage Applications Decreased from the Previous Week
Last Updated 10:00AM EST
Stocks are in the green after the first 30 minutes of today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 0.01%, 0.1%, and 0.2%, respectively.
The technology sector (XLK) is the laggard so far, as it is down 0.2%, while the best-performing sector, energy (XLE), is up 0.8%.
Shares of Peloton (PTON) surged over 15% after announcing that it will sell its exercise bikes and accessories on Amazon’s (AMZN) marketplace. Once a market darling during the pandemic, Peloton sales have been troubled ever since the world reopened. Investors are hoping that this latest move will help turn the company’s fortunes around.
Meanwhile, the U.S. 10-Year Treasury yield is hovering around 3.1%, which is up five basis points compared to yesterday’s close. The spread between the 10-Year and Two-Year U.S. Treasury yields remains negative, as it currently sits at -25 basis points.
On Wednesday, the Mortgage Bankers Association released its weekly report for the U.S. 30-Year mortgage rate. The mortgage rate increased to 5.65% compared to last week’s reading of 5.45%.
Due to the higher rates, the number of mortgage applications decreased week-over-week by -1.2%, following last week’s decrease of -2.3%. This indicates that sentiment in the real estate market is falling, which is consistent with other data that has been released so far.
In addition, mortgage application volume is down substantially on a year-over-year basis, with the Mortgage Market Index at 270.1 compared to 737.1 on August 18, 2021.
Pre-Market Update
Stock futures moved lower early Wednesday morning as the Federal Reserve’s Jackson Hall symposium approaches. Fed Chair Jerome Powell is expected to give a peak into the central bank’s policy tightening plans on Friday.
Futures on the Dow Jones Industrial Average (DJIA) inched 0.08% lower, while those on the S&P 500 (SPX) lost 0.05% as of 4.28 a.m. EST, Wednesday. Meanwhile, the Nasdaq 100 (NDX) futures dipped 0.05%.
At the end of the regular trading session on Tuesday, the S&P 500, the Dow, and the Nasdaq 100 closed 0.22%, 0.47%, and 0.07% lower. This was the third consecutive session ending in red for the Dow and the S&P 500.
Shares of Twitter (TWTR) tumbled more than 7% on Tuesday as a complaint alleging mismanagement was made against the microblogging site by whistleblower Peiter Zatko, a former employee of the company.
Economic Updates
The markets are expected to remain volatile until the Friday speech. Experts believe that it may still be too early for the Fed to ease its stance on interest rate hikes, as the target inflation rate of 2.25%-2.5% is too far from the current inflation rate of 8.5% (as of July).
Moreover, worrisome economic data released on Tuesday revealed that business activity was sharply low in August. The slowdown was led by a decline in the services sector. Manufacturing slowed down as well during the course of the month.
The U.S. purchasing managers index (PMI) was 45.0 in August, which was below July’s reading of 47.7. This means that activity in both the manufacturing and service sectors was lower in August than in July.
According to new surveys, economic activities in Europe, Japan, and the U.S. slowed down considerably in August. Elevated prices across the globe, high interest rates, and persistent supply-chain issues aggravated by the Russia-Ukraine war are obstructing global output.
