‘Brake’ on Wall’s summer rally with significant Nasdaq and S&P 500 losses for the week

Big losses for Wall Street’s three main indexes on Friday, with the technology sector under the biggest pressure from the rise in US bonds, while investment sentiment was also dampened by the monthly expiration of stock and index options worth 2 trillion dollars. The report on the 5th brought the US money market into negative territory, with the Nasdaq and S&P 500 ending a streak of 4 profitable weeks.

The minutes from the last meeting of the US central bank released on Wednesday did little to boost investor sentiment while macroeconomic data released this week presented a transitory and contradictory state of affairs in the US economy.

Investors are now turning to speeches by officials at the annual economic conference in Jackson Hole, Wyoming, in anticipation of new data on the path of interest rates as central banks try to rein in the highest inflation in four decades. The most interest is expected to gather the speech of the chairman of the Federal Reserve, Jerome Powell on Friday.

Economists who spoke to CNBC estimate that Powell will emphasize during his speech at the conference of central bankers that the Fed is determined to tame high inflation in the US even if it means a recession.

“The key message will be the Fed’s dogged determination to reduce inflation, even though it knows it could jeopardize the short-term growth outlook,” said Lou Crandall, an economist at Wrightson ICAP.

Economists are divided on whether Powell will give any indication of the size of an expected rate hike in September. Northern Trust’s Carl Tannenbaum thinks Powell will signal a 75 basis point hike for September. Steven Stanley, an economist at Amherst Pierpoint, expects Powell to outline the Fed’s broader moves and not focus on the next monetary policy meeting.

Over the past two weeks, Fed officials have been stressing that the size of a rate hike in September is data-dependent, and as Stanley pointed out, between the Jackson Hole speech and the Fed meeting will be another round of macro measures that will be announced.

In this climate, the statements of the president of the Fed branch in Richmond, Thomas Barkin, the manufacture. “We still have plenty of time before we need to decide on the exact rate of the next key rate hikeat the meeting of September 20 and 21″, he emphasized.

The president of the St. Louis Fed branch, James Bullard, indicated his preference for a 75 basis point hike in the key rate. The US central banker estimated that it would take about 18 months for upward pressure on prices to recede near the Fed’s target of inflation near 2%.

“It is clear that the Fed’s primary goal is to reduce inflation, even as it recognizes the risk of derailing the economy,” said Richard Hunter, analyst at Interactive Investor.

“The market is still betting on a modest 0.5% rate hike in September, although concerns are growing that there could be another 0.75% hike, with rates expected to move to 3 .5% in early 2023. Fed officials’ comments suggest there is still some way to go before taming inflation is achieved,” Hunter said in a note.

Meanwhile, the government bond yields of the US moved higher on Friday, with the 10 years old to add 10.8 basis points to 2.987%, the highest level since July 20 and the biggest daily gain since Aug. 5, according to Dow Jones Market Data. In the week the 10-year yield increased by 13.9 basis points, while in the last three weeks it has gained 34.5 bp. THE performance of the 2-year added 3.2 basis points to 3.265%, while on the week it gained less than 1 bp.

That dollar rose 0.6% today, hitting a 5-week high.

Indicators – Statistics

The industrialist is on the board Dow Jones lost 292 points or 0.86% to close at 33,706.54, the broadest S&P 500 fell by 1.29% to 4,228.45 units and the technology-weighted Nasdaq slipped by 2.01% to 12,705.22 points.

In the week the Dow recorded small losses of 0.2%, the S&P 500 slipped by 1.2%, while the largest decline was recorded by the technology index with a 2.6% plunge.

From the 30th shares that make up the industrial index, 6 closed with a positive sign and 24 with a negative. The gains were led by the title of Johnson & Johnson with an increase of 1.5%, while at the bottom were Boeing with losses of 3.46% and JPMorgan and Nike which were at -2.49% and -2.45% respectively.

Bed, Bath & Beyond shares plunge 40.54%; in the wake of billionaire investor Ryan Cohen’s announcement that he has sold his stake in the company, netting more than $55 million in profits.

This week’s economic data showed US retail sales were flat, while some major retailers posted disappointing results. Among them, Target, which fell today by 3.48%, while Kohl’s recorded a 4.6% dive.

Deere stock added 0.34% in its wake announcement of profits for the third quarter of the yearhowever the farm and construction equipment company missed analysts’ estimates.