Stock Market’s Summer Rally Cools Off
S&P 500 declines for a second straight week Inflation has been back in focus, with data points sending investors conflicting signals. Photo: Spencer Platt/Getty Images By Jack Pitcher Aug. 11, 2023 4:36 pm ET The summer stock market rally has started to cool after the S&P 500 fell modestly for a second consecutive week. The tech-heavy Nasdaq Composite was Friday’s worst major index performer, falling 0.7% to a one-month low. The S&P 500 slid 0.1% and the Dow Jones Industrial Average added 0.3%. Inflation has been back in focus, with data points sending investors conflicting signals. On Friday, the producer-price index showed supplier prices ticking up from June’s flat reading, prompting some concern after a largely encouraging July CPI report the day before. Treasury yield
Inflation has been back in focus, with data points sending investors conflicting signals.
Photo: Spencer Platt/Getty Images
The summer stock market rally has started to cool after the S&P 500 fell modestly for a second consecutive week.
The tech-heavy Nasdaq Composite was Friday’s worst major index performer, falling 0.7% to a one-month low. The S&P 500 slid 0.1% and the Dow Jones Industrial Average added 0.3%.
Inflation has been back in focus, with data points sending investors conflicting signals.
On Friday, the producer-price index showed supplier prices ticking up from June’s flat reading, prompting some concern after a largely encouraging July CPI report the day before. Treasury yields rose Friday, with the yield on the benchmark 10-year bond hitting 4.166%, from 4.081%.
Later in the morning, the University of Michigan’s August gauge of consumer sentiment inched down from a nearly two-year high, but showed Americans expect slightly lower inflation next year. Economists watch inflation expectations closely, believing that high consumer expectations for prices can feed additional inflation.
For markets that have priced in a soft-landing scenario where the Federal Reserve curbs inflation without starting a recession, every inflation data point is critical.
“The increase in wholesale prices serves as a reminder that the data-dependent Fed isn’t ready to declare victory on its campaign to quell inflation,” said Quincy Krosby, chief global strategist at LPL Financial.
The Nasdaq, which has a high weighting of growth-oriented companies that are more sensitive to interest rates, fell for two straight weeks for the first time this year. The largest technology firms have soared higher this year, prompting concern over what Wall Street sees as expensive valuations.
Nvidia, the S&P 500’s top performer this year, fell 3.6% Friday, for its fourth consecutive daily loss.
“After a dominant start to the year, technology has lost momentum,” Rob Anderson, an analyst at Ned Davis Research, wrote in a research note Friday. “Mega-cap weakness and valuations have the sector on a short leash.”
Elsewhere Friday, UBS’s U.S. shares gained 5.6%, after the Swiss lender said it no longer needed a $10 billion government backstop for its emergency takeover of Credit Suisse.
News Corp was the S&P 500’s best performer, adding 4.6%. The media company reported record profit at its Dow Jones unit, which publishes The Wall Street Journal, but booked a loss overall.
Volatile trading in WeWork
shares continued. The co-working space operator, which on Tuesday raised doubt about its ability to stay in business, has staged a 54% rally over the last two days. Its shares closed Friday little changed from where they were before WeWork issued the “going concern” warning. WeWork shares remain down more than 98% from when they began trading.Overseas, stocks were mostly lower. Benchmarks in Europe declined while Japanese markets were closed for a holiday.
The Shanghai Composite Index fell 2% after data showed a steep drop in new loans issued by Chinese banks.
Oil prices rose, with Brent crude up 0.5% to $86.81 a barrel.
Write to Jack Pitcher at [email protected]
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