Stock Market Today

The stock market had a positive bias for the entirety of today’s session but remained in a narrow range until the final 30 minutes of trade, where the major indices pushed to new session highs. Today’s buying was fueled by the emerging hope that Fed Chair Powell’s comments tomorrow regarding the rate-hike path will align with what market participants want to hear. The 10-yr note yield moving markedly lower was another support factor for today’s buying effort.

Mixed earnings results since yesterday’s close were met with mixed price action. Salesforce (CRM 173.91, -6.10, -3.4%) was a limiting factor for the Dow today after disappointing guidance while other growth stocks got a boost from the drop in the 10-yr yield and some relatively impressive results from Snowflake (SNOW 196.28, +36.79, +23.1%).

NVIDIA’s (NVDA 179.13, +6.91, +4.0%) below-consensus Q3 revenue guidance was met with buying interest as some participants saw the weak guidance as an indication the bottom is near for the semiconductor industry. The PHLX Semiconductor Index closed with a 3.7% gain.

The positive bias today left all 11 S&P 500 sectors in the green with gains ranging from 0.5% (consumer staples) to 2.3% (materials). The risk-on tone had defensive sectors, utilities (+0.6%), consumer staples (+0.5%), and health care (+1.1%), trailing the broader market.

Energy (+0.8%) also fell towards the bottom of the pack amid falling oil prices. WTI crude oil futures fell 1.9% to $93.08/bbl.

The Treasury market was mixed with the 2-yr note yield rising two basis points to 3.39% while the 10-yr note yield fell eight basis points to 3.03%. Notably, several Fed officials commented that the Fed has more work to do in fighting inflation. St. Louis Fed President Bullard (FOMC voter), for one, thinks inflation could be more persistent than many on Wall Street expect and that this risk is underpriced in the markets.

Looking ahead to Friday, market participants will receive the July PCE Price Index and core PCE Price Index (Briefing consensus 0.3%; prior 0.6%) included in the Personal Income (Briefing consensus 0.6%; prior 0.6%) and Spending Report (Briefing consensus 0.4%; prior 1.1%) at 8:30 a.m. ET. July Advanced Intl. Trade in Goods (prior -$98.2B), Advanced Retail Inventories (prior 2.0%), and Advanced Wholesale Inventories (prior 1.9%) are also out at 8:30 a.m. ET. The August University of Michigan Consumer Sentiment final reading (Briefing consensus 55.1; prior 55.1) is out at 10:00 a.m. ET.

The focal point after the PCE Price Index, though, will be Fed Chair Powell’s speech at 10:00 a.m. ET at the Jackson Hole Economic Policy Symposium.

Reviewing today’s economic data:

Initial jobless claims for the week ending August 20 decreased by 2,000 to 243,000 while continuing jobless claims for the week ending August 13 decreased by 19,000 to 1.415 million.
The key takeaway from this report is the improvement in initial claims. A reading below 250,000 certainly indicates that labor market conditions remain tight, which means the potential for sticky wage-based inflation pressures also remains tight, and that is unlikely to be a comforting indication for Fed officials.

The revised Q2 GDP report showed real GDP decreased at an annual rate of 0.6% versus the advance estimate of -0.9%, with an upward revision to consumer spending helping. The Q2 GDP Price Deflator, though, was revised up to 8.9% from 8.7%.
The key takeaway from the report is simply in the understanding that it was not as bad as first reported, but given its dated nature (we’re almost two-thirds of the way through Q3), it cannot be considered a market-moving report.
Weekly EIA Natural Gas Inventories showed a build of 60 bcf after last week’s build of 18 bcf.

Dow Jones Industrial Average: -8.4% YTD
S&P 400: -9.3% YTD
S&P 500: -11.9% YTD
Russell 2000: -12.5% YTD
Nasdaq Composite: -19.2% YTD. 

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