Ah, Wall Street! The land of bulls, bears, and everything in between. This week was nothing short of a rollercoaster ride. The Dow Jones Industrial Average eked out a modest gain, finishing the week 0.1% higher. Conversely, the S&P 500 and Nasdaq weren’t so lucky, recording 0.2% and 0.4% declines, respectively.
But wait, there’s more! Both the S&P 500 and Nasdaq closed below their 50-day moving averages. For the uninitiated, that’s often a red flag signaling potential bearishness ahead. Will the Fed come to help? So, buckle up!
Table of Contents
Sector Spotlight: The Good, the Bad, and the Ugly
Information Technology: A Heavyweight Takes a Hit
Let’s talk about the elephant in the room: Information Technology. This sector is the most heavily weighted in the S&P 500, and boy, did it take a nosedive this week, declining by a whopping 2.2%.
Apple and Adobe: The Downward Duo
Apple (AAPL), the tech titan, saw its stock drop by 1.8%. Why, you ask? Well, it’s facing scrutiny in China and had a product event introducing the iPhone 15. But apparently, the market wasn’t impressed. Then there’s Adobe (ADBE), which tumbled 5.6% following its underwhelming fiscal Q4 guidance. Talk about a double whammy!
Semiconductors: Not So Chipper
Semiconductors also had a rough week. The PHLX Semiconductor Index fell by 2.5%, following news of Arm’s (ARM) successful IPO and a Reuters report that Taiwan Semiconductor Manufacturing Co. (TSM) is delaying chip equipment shipments. Yikes!
Corporate Drama: Airlines and Auto Workers
Airlines: Turbulence Ahead
Several airlines, including Spirit Airlines (SAVE), Frontier Group (ULCC), Delta Air Lines (DAL), and American Airlines (AAL), sent out warning signals about their Q3 outlooks. The culprit? Rising fuel costs. So, if you’re invested in airlines, fasten your seatbelts; it’s going to be a bumpy ride.
Auto Industry: Strikes and Gains
In a surprising twist, the United Auto Workers launched targeted strikes at manufacturing plants affecting Ford (F), Stellantis (STLA), and General Motors (GM). Despite this, these companies still managed to close the week with gains. Ford was up 2.5%, Stellantis soared 5.6%, and GM revved up 3.0%. Go figure!
Economic Indicators: Inflation and More
The CPI Conundrum
The August Consumer Price Index (CPI) was up a robust 0.6%, and core CPI, which excludes food and energy, was up 0.3%. For those scratching their heads, core-CPI is what the Fed closely monitors. And guess what? It’s still well above the Fed’s 2.0% target. So, the Fed will likely maintain a “higher for longer” mindset regarding interest rates.
Bond Yields and Oil Prices
The bond market seemed to take the inflation data in stride. The 2-yr note yield rose seven basis points to 5.04%, and the 10-yr note yield also rose seven basis points to 4.33%. No panic there! Meanwhile, WTI crude oil futures jumped 4.2% to $91.00/bbl. So, if you’re feeling the pinch at the pump, you’re not alone.
What’s Next? The Fed’s Upcoming Meeting
All eyes are on the Federal Reserve’s meeting next week. While a rate hike isn’t expected, market participants are keen to hear about the updated Summary of Economic Projections and Fed Chair Powell’s tone at his press conference.
Wrapping It Up
So, there you have it—a week full of ups and downs, twists and turns, and a whole lot of drama. Whether you’re a bull, a bear, or just a curious spectator, one thing’s for sure: Wall Street never fails to keep us on the edge of our seats. Until next week, keep your eyes peeled and your portfolios diversified!
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