Another choppy day on Wall Street ends with indexes mixed

Thursday, August 19, 2021 | Damian J. Troise And Alex Veiga, AP Business Writers

In this June 16, 2021 file photo, flags adorn the facade of the New York Stock Exchange. Stocks are opening lower on Wall Street Thursday, Aug. 19, pulling major indexes a bit further back from the latest record highs they set at the beginning of the week. ing growth at the popular online brokerage app could slow down, and Macy's rose 6% after issuing a strong forecast. (AP Photo/Richard Drew, File)

Wall Street closed out another choppy day of trading Thursday, leaving the major stock indexes on pace for a weekly loss.

The S&P 500 managed a 0.1% gain after having been down 0.7% in the early going. The Nasdaq composite also recovered to eke out 0.1% gain, while the Dow Jones Industrial Average slipped 0.2%.

Small-companies fell broadly. A late-afternoon rally in technology stocks helped offset some of the losses in energy companies, banks and other sectors. Prices for oil and other commodities also fell, pulling mining and energy stocks lower. The yield on the 10-year Treasury note fell to 1.25%.

Investors continued to size up quarterly report cards from retailers. Macy's posted its second-biggest single-day gain as traders cheered the department store chain's latest results.

Much of the market’s choppiness, especially in the S&P 500, is due to investors trying to position themselves as they gauge the pace of the recovery and how it will benefit different sectors of the economy.

“One of the challenges right now is we’re getting some degree of a mixed message about what is working and what’s not,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

The market first has to gauge the near-term prospects for the economy as COVID-19 remains a threat, Freedman said. At the same time, investors have to also focus on what the economy looks like after the virus recedes or when the world learns to live with the virus in a different way.

“There’s going to be a lot of fits and starts,” he said.

The S&P 500 added 5.53 points to 4,405.80. The Dow fell 66.57 points to 34,894.12. The tech-heavy Nasdaq gained 15.87 points to 14,541.79. The Russell 2000 index of smaller companies fell 26.36 points, or1.2%, to 2,132.42.

The broader market has been losing ground overall since the benchmark S&P 500 reached another record high on Monday. It's now within 1.7% of that record and on pace for its first weekly loss in three weeks. The Dow, Nasdaq and Russell 2000 are also down for the week.

Technology companies made broad gains, including 4% for chipmaker Nvidia after it reported strong financial results, but those gains were outweighed by a slide in financial and industrial stocks. Companies that rely on consumer spending also weighed heavily on the market. Energy stocks took the heaviest losses in the S&P 500 as energy prices fell.

Commodities fell broadly, with everything from oil to agricultural commodities to metals moving lower. Copper prices fell 1.9%, while the price of U.S. crude oil closed 2.7% lower. The drop in commodities prices dragged down oil companies and those who extract raw materials for industrial uses. Miner Freeport-McMoRan, Devon Energy and Occidental Petroleum fell 3% or more.

The volatility in the commodities markets is notable because investors have been acutely focused on inflation as the global economy emerges from the pandemic. Earlier this year prices for basic materials like lumber and copper and gasoline were all rising steadily and several high multi-year highs. Most of those gains have now been erased with declines in recent weeks.

Investors got a bit of positive economic news when the Labor Department reported another weekly drop in the number of Americans filing for unemployment benefits. Claims fell 29,000 to 348,000 last week, a pandemic low. The four-week average fell 19,000 to just below 378,000, also a pandemic low.

While stocks in the benchmark S&P 500 are now down roughly 1.4% this week, fund managers do not expect much volatility this month as investors will have little data to work with and earnings season is now mostly over. August also tends to be a popular month for investors to take their vacations, so trading is typically slower. September tends to be a much more volatile month once Wall Street is back to work.

Government bond yields fell. The 10-year Treasury note traded at a yield of 1.25%, down from 1.27% the day before.

Robinhood sank 10.3% as traders worried that the booming growth at the popular online brokerage app could slow down. Macy’s soared 19.6% after issuing a strong forecast and reporting earnings that were far bigger than analysts were expecting. That nearly matched the biggest percentage gain the stock had in its history, which came on May 27, 2020.

7 Stocks That Can Withstand a Taper Tantrum

The stock market is stimulated like a child with a sugar high on Halloween night, and investors are enjoying the ride. It seems like nearly every sector continues to point in one direction. But seasoned investors know that the markets don’t move in the same direction all the time. And even long-term bulls admit that a correction may be coming.

One reason for this is that the Federal Reserve (i.e. “The Fed”) is “talking about, talking about” an end to its asset purchase program. If that talk turns into concrete action, then it would be almost a sure sign that interest rates will rise sooner than expected.

That combination is typically negative for equities, such as stocks. Yet, even if the Fed announces an earlier-than-expected tapering plan, there are stocks that will hold up well and even thrive. And that’s the focus of this presentation. We’re taking a looks at seven stocks that stand to benefit from a less accommodative monetary policy. Financial stocks are one group of stocks that will benefit from rising interest rates. And you should also consider stocks with a high return on equity (ROE).

ROE = Net Income/Shareholders’ Equity

Stocks with a high ROE are reinvesting cash at a high rate of return which can make them an ideal choice when that cash becomes more valuable.

View the "7 Stocks That Can Withstand a Taper Tantrum".

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