Most U.S. stocks fell Thursday following a mixed round of data on the economy, keeping them on track for their worst week since April. The S&P 500 slipped 0.3% for a third straight drop, and the Dow Jones Industrial Average lost 219 points, or 0.5%. The Nasdaq composite held up better and added 0.3% thanks to gains for Tesla and other Big Tech stocks. Treasury yields also slipped a bit in the bond market following the mixed economic reports, with one showing slower hiring but another indicating low layoffs.
Stocks have struggled this week after a report on U.S. manufacturing reignited worries about the slowing U.S. economy and its effect on corporate profits. The upcoming report on job growth by the U.S. government is highly anticipated, and economists are expecting an acceleration in hiring. This report could influence the Federal Reserve’s decision on interest rate cuts at its next meeting later this month. The Federal Reserve has hinted at cutting rates to protect the job market and prevent the economy from recession, raising concerns on Wall Street about the effectiveness and timing of these moves.
In the bond market, the yield on the 10-year Treasury eased slightly, down from its recent highs. The 10-year yield is close to the end of a two-year period where it was lower than the two-year Treasury yield, known as an inverted yield curve. This inversion is often seen as a sign of an upcoming recession, causing concern among investors. The 2020 pandemic has defied traditional predictions and expectations, making it difficult to predict the impact of the inverted yield curve on the market and the economy.
On Wall Street, Old Dominion Freight Line reported discouraging revenue trends for August, citing softness in the economy. Its stock fell nearly 5%. Verizon announced acquiring Frontier Communications in a $20 billion deal, leading to a slip in Verizon’s stock and a drop in Frontier Communications. However, Tesla rose after outlining plans for artificial intelligence developments, while JetBlue Airways saw an increase in its stock after raising revenue forecasts for the summer. Overall, the S&P 500, Dow, and Nasdaq had mixed performances.
In stock markets abroad, indexes were mixed across Asia and Europe, with Japan’s Nikkei 225 falling after strong data on wage growth raised expectations for an interest rate hike. The uncertainties in the global economy, combined with the impact of mixed economic data in the U.S., continue to create volatility in the stock market. Investors are closely watching upcoming reports and Federal Reserve decisions to gauge the future direction of the market and the economy. The month ahead is expected to be crucial in determining the outlook for stocks and bonds.
