Dow falls 400 pips, Nasdaq coughs up early good points as Wall Road heads for the shedding month
The Dow Jones Industrial Average fell on Thursday as Wall Street appeared to be closing a difficult month.
The 30-stock average fell 400 points, or more than 1%, after rising on the opening bell. The broader S&P 500 was down 0.8%, while the tech-heavy Nasdaq Composite was down 0.3% after being solidly positive.
Concerns about inflation and supply chain problems continued to weigh on stocks. Bed Bath & Beyond shares fell more than 20% in early trading after the company said these issues hurt the company’s second quarter results and the news weighed on other retail stocks as well. Walgreens Boots Alliance and Home Depot fell more than 2%, making them two of the worst performers on the Dow.
Energy and financials, which have been among the top performers in the past few weeks, took a step back on Thursday, weighing on the Dow. Goldman Sachs and JPMorgan stocks were down more than 1%.
Tech stocks struggled to hold their early gains, despite little change in 10-year government bond yields and both Apple and Amazon turning negative.
However, chip stocks, including Nvidia and Micron, were higher after weighing on the broader market on Wednesday. Netflix has set a new intraday record high.
Thursday’s weakness comes as Wall Street wraps up a tough September for stocks.
At the start of Thursday, the Dow was down 2.7% for the month, the S&P 500 was down 3.6% and the Nasdaq Composite was down 4.9%. September lived up to its reputation loss as fears of a housing crisis in China, rising inflation and a late hike in interest rates spurred on by the Federal Reserve signaling it would soon begin removing incentives plagued the market became.
“We wouldn’t get involved in any end-of-quarter machinations today and continue to advise fading rallies (especially in technology) as the coming weeks will be rocky,” wrote Adam Crisafulli of Vital Knowledge.
The 10-year government bond yield has risen over the past week, adding further weakness to tech and other growth stocks. The yield hovered 1.54% on Thursday after ending at 1.30% in August.
The losses in September resulted in a mediocre third quarter for the market. For the 3 month period, the Dow is slightly in the red, while the Nasdaq Composite is almost unchanged. The S&P 500 is up 1.4%. The S&P 500 is still 16% up year over year.
October is known for some heavy sell-offs, but overall it is typically the start of better seasonal performance for stocks. The S&P 500 posted an average gain of 0.8% for the month, according to the Stock Trader’s Almanac.
“September lived up to its reputation and weighed on stock portfolio returns, but not too badly,” wrote Ed Yardeni of Yardeni Research. “There have been many concerns that higher wages, higher energy prices, and higher transportation costs will weigh on profits for the remainder of this year and through 2022. This is certainly something that we will pursue. But so far the analysts remain relative. “Sanguine.”
Investors also kept an eye on Washington when Senate Majority Leader Chuck Schumer said late Wednesday the chamber had reached an agreement to avoid a government shutdown this week. Schumer said he would schedule a vote on Thursday on the stopgap, which the government would run through early December. The deal would still have to pass the house.
Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen testified Thursday morning to the House of Representatives Financial Services Committee. Yellen reiterated her call to Congress to raise the debt ceiling, saying it was “catastrophic” not to do so.
On the data front, initial jobless claims for the previous week were 362,000. According to the Dow Jones, economists were expecting 335,000 copies to be printed.
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