NEW YORK: The Dow and the S&P 500 ended slightly lower on Tuesday (Aug 22) as investors stayed worried the Federal Reserve (Fed) will keep interest rates higher for longer and as banks shares eased.
The Dow Jones Industrial Average fell 174.86 points, or 0.51%, to 34,288.83, the S&P 500 lost 12.22 points, or 0.28%, to 4,387.55 and the Nasdaq Composite added 8.28 points, or 0.06%, to 13,505.87.
“Today it’s a sober mindset,” said Interactive Brokers strategist Steve Sosnick, adding that Monday’s rally in tech shares was probably “overenthusiastic” in light of rising bond yields.
The financial sector fell 0.9% and was the biggest drag on the S&P 500. An S&P downgrade of credit ratings of multiple regional US lenders weighed on banks shares, with the KBW regional banking index sliding 2.7% and the S&P 500 banks index falling 2.4%.
Investors hope for clarity on the rate outlook when Fed chair Jerome Powell speaks at a meeting of central bankers on Friday in Jackson Hole, Wyoming.
“Rates have backed up pretty good again, so that’s kind of putting somewhat of a damper on stocks,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
The benchmark 10-year Treasury yield hit almost 16-year highs overnight on the view the Fed could keep rates higher for longer. Higher borrowing costs can slow spending by businesses and consumers.
Powell “likely will continue to emphasise the Fed’s laser-focus on taming inflation, even with the central bank’s benchmark funds rate already at the highest level in 22 years,“ said a note from Charles Schwab.
Investors also eagerly awaited results and a forecast from chip heavyweight Nvidia due after the bell on Wednesday. Nvidia surprised investors with its strong forecast in May, fuelling a rally in its own and other tech stocks amid artificial intelligence hopes.
Shares of Nvidia hit an all-time high of US$481.87 early but were down 2.8% on the day.
Department stores were among the day's biggest decliners. Macy's sank 14.1% after the chain warned of weak consumer spending through the crucial holiday shopping season. Shares of Kohl’s Corp were down 10.3% while Nordstrom Inc was down 9.8%. – Reuters, AFP
Source: The Sun Daily
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