Stock market today: S&P 500, Nasdaq snap 8-day winning streak as focus turns to Jackson Hole
08/21/2024 03:09
Markets are marking time as anticipation builds for Fed Chair Powell's speech at Jackson Hole, expected to usher in a rate cut.
Markets took a breather on Tuesday to snap their longest rally this year, with all three major indexes closing in the red as the focus shifts to Fed Chair Powell's speech at Jackson Hole later this week.
The S&P 500 (^GSPC) dropped about 0.2%, coming off an eight-strong run of daily wins for the benchmark index — its longest since November. The Dow Jones Industrial Average (^DJI) also shed around 0.2%, or less than 100 points, while the tech-heavy Nasdaq Composite (^IXIC) fell roughly 0.3%.
Stocks are marking time as anticipation builds for Powell's speech at the Jackson Hole get-together for central bankers on Friday.
Investors will also be closely watching expected annual revisions from the Bureau of Labor Statistics (BLS) on Wednesday, which could knock up to a million jobs off previously reported job growth over the last year.
Stocks have made a strong comeback from an early August rout as fresh economic data bolstered the case for the central bank to start lowering rates sooner — and maybe further — than previously thought.
Wall Street expects Powell to set the stage for a September rate cut in dovish remarks on Friday, now that several Fed officials have given their blessing to easing. The debate now is whether a 0.5% cut is in the cards, rather than on the timing of the move, and what part upcoming labor data will play in deciding that.
On the corporate front, Lowe's (LOW) stock fell after the company cut its annual profit and sales forecasts in its quarterly earnings. The home improvement retailer joined rival Home Depot (HD) in flagging muted consumer demand for big-ticket purchases.
In commodities, gold (GC=F) resumed its rally, climbing above $2,520 an ounce to hit another record high. The metal's price has risen over 20% so far this year as geopolitical conflicts and rate-cut prospects burnish the appeal of the safe-haven and non-interest-bearing asset.
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Markets snap longest rally of 2024
Markets snapped their longest rally this year with the S&P 500 (^GSPC) dropping about 0.2% after coming off an eight-strong run of daily wins for the benchmark index — its longest since November.
The Dow Jones Industrial Average (^DJI) also shed around 0.2%, or less than 100 points, while the tech-heavy Nasdaq Composite (^IXIC) fell roughly 0.3%.
The most stocks are outperforming the S&P 500 since November 2022
While the AI trade has once again been leading the market's latest leg higher, there have been promising developments under the surface at play too.
The S&P 500 equal-weighted index (^SPXEW), which is less influenced than the cap-weighted S&P by moves in Big Tech, just hit a new record high. Sectors including Utilities (XLU), Consumer Staples (XLP), and Health Care (XLV) are now sitting at 52-week highs, while Financials (XLF) are currently at a record level.
"This has been a really healthy rally in our view," Abby Yoder, JPMorgan US equity strategist, told Yahoo Finance. "It has been this broadening out. Breadth is the best that it's been since the summer of last year. In terms of the participation across different sectors, different names."
Still, the S&P 500 is up almost 18% this year, outpacing the equal-weighted index's nearly 9% this year.
"The reality is that in bull markets, all sectors typically go up," said Kevin Gordon, senior investment strategist at Charles Schwab.
In July, Gordon's team at Schwab pointed out in Yahoo Finance's Chartbook that the amount of S&P 500 companies outperforming the index on a rolling two-month basis had fallen to a historic low.
Since then, that narrative has fully flipped. As of Monday's close, roughly 58% of members in the S&P 500 were outperforming the index, the largest swath of outperformance since November 2022, when the current bull market began.
"The trend is much more important," Gordon said. "Across those metrics, things look relatively healthy."
Health Care, Consumer Staples lead sector action
Health care (XLV) and Consumer Staples (XLP) were the only two sectors in the green on Tuesday, while Energy (XLE), Industrials (XLI), and Financials (XLF) served as the day's biggest laggards.
All three major indexes edged lower after notching their longest rally so far this year.
(Source: Yahoo Finance) Notably, technology (XLK) has led the comeback in stocks.
Although it was not the best-performing sector on Tuesday, if you take a look at the sector action over the past eleven trading days, it's clear tech has been a leader as investors "buy the dip" amid its early August sell-off.
Consumer discretionary (XLY) has also outperformed in recent weeks with stronger-than-expected retail sales pointing to a consumer who is still spending.
(Source: Yahoo Finance) More Americans think they'll be out of work...
More Americans are looking for jobs as unemployment concerns rise to their highest level in a decade.
According to a new survey released by the Federal Reserve Bank of New York on Monday, the average expected likelihood of becoming unemployed in the next four months reached its highest level in the survey's 10-year history, rising to 4.4% compared to 3.9% in the year-earlier period.
The expected likelihood of moving to a new employer also increased, rising to 11.6% last month from the 10.6% seen in July 2023.
More respondents are also actively on the job hunt, with 28.4% saying they've been searching for a new job over the past four weeks — the highest level since March 2014 and an increase from 19.4% in July 2023.
The survey, which also noted decreased satisfaction with wage compensation, non-wage benefits, and promotion opportunities at respondents’ current jobs, comes as the Federal Reserve weighs recent labor market weakness with the unemployment rate now at 4.3%.
Economists and strategists have warned any further deterioration of the labor market would likely have a negative spillover effect to markets and beyond.
"The problem is that we continue to see weakness in the labor market and we think that that's going to ultimately be what drives this market lower," Ahmed Riesgo, chief investment officer at Insigneo, told Yahoo Finance on Tuesday.
"We know that the US consumer is doing OK, but the US consumer is doing OK because they still have a job. The second that the employment market flips from one of surplus to one of deficit, which is something that we think we're rapidly nearing, we think the US consumer, unfortunately, will falter."
But others disagree, pointing to recent data points that paint a much different picture of the economy.
Consumer prices have continued to to ease closer to the Fed's 2% inflation target. Positive retail sales data for the month of July showed the consumer is still spending. Consumer confidence is rebounding. And recent filings for initial unemployment benefits have fallen more than expected.
"We're coming off unusual lows [in the unemployment rate] following a very unusual time during the pandemic," Joe Brusuelas, chief economist at RSM, told Yahoo Finance on Tuesday, noting hiring needed to slow in order to return to price stability. "A lot of the rules that some of these so-called forward-looking investors use aren't really going to work this time because the economy is in a very different place."
Gold prices extend rally
Gold (GC=F) prices extended their recent rally on Tuesday, with the precious metal trading above $2,545 per ounce as investors anticipate a September rate cut from the Federal Reserve.
Gold, which typically does well in low-interest-rate environments as it does not produce an annual yield, has also seen an uptick in prices amid sticky inflation, along with heightened geopolitical risks and political uncertainty.
UBS issued a recent bullish outlook, estimating gold could reach $2,600 per ounce by the end of 2024.
Notably, with prices now firmly above $2,500 an ounce, one bar of gold costs more than 1 million dollars.
Netflix stock soars past record high — here's why
Netflix stock just hit an all-time high.
On Tuesday, shares of the streaming giant soared past their 2021 record intraday high of $701 to trade around $710.
The moves come as investors applaud the company's foray into live sports while its ad-supported tier continues to gain traction, with the company revealing in a blog post that it secured "a 150% plus increase in upfront ad sales commitments over 2023."
Upcoming movies and series like "Happy Gilmore 2" and "Squid Game 2," along with the recent acquisition of live sports content like the NFL Christmas Day games and WWE Raw, which will kick off in January 2024, have fueled the success of those ad partnerships, Netflix said.
"Our advertising clients remain excited about our highly engaged audience and the variety and quality of our programming," said Amy Reinhard, president of advertising at Netflix.
Reinhard cited ad partners that include LVMH, Amazon, Hilton, L’Oreal, and Google, among others. The company will launch its in-house ad tech platform globally in 2025.
But it's not just advertising that's fueling the recent rally.
Analysts have also said the company is well-positioned to hike prices. Netflix last raised the price of its Standard plan in January 2022, upping the monthly cost to $15.49 from $13.99. It also raised the price of its Premium tier by $2 to $19.99 a month at the time; the company again raised the cost of that plan in October to $22.99.
The company has yet to raise the price of its ad-supported offering, introduced under two years ago, which remains one of the cheapest ad plans among all of the major streaming players at $6.99 a month.
Netflix has previously said its goal is to make ads "a more substantial revenue stream that contributes to sustained, healthy revenue growth in 2025 and beyond." It will phase out its lowest-priced ad-free streaming plan as a result, making the $15.49 Standard plan its lowest-priced offering for ad-free experiences.
Netflix's record-high price action on Tuesday follows a mid-July sell-off that hit shares after the company reported revenue guidance that missed Wall Street's expectations for the current quarter. Shares had also been under pressure from a more recent sell-off in Big Tech that's since recovered.
Stocks open slightly lower
Stocks edged slightly lower on Tuesday after notching their longest rally of the year.
The S&P 500 (^GSPC) hugged the flatline, coming off an eight-strong run of daily wins for the benchmark index — its longest since November. The Dow Jones Industrial Average (^DJI) also traded flat, while the tech-heavy Nasdaq Composite (^IXIC) dropped about 0.1%.
