4:16pm: Bearish sentiments lingers as traders wait for more data
The Dow closed Monday down 184 points, 0.6%, at 32,099, the Nasdaq Composite slid 124 points, 1%, to 12,018 and the S&P 500 fell 27 points, 0.7%, to 4,031.
The benchmarks struggled again after a massive selloff on Friday, driven by fears that the Federal Reserve will continue to aggressively raise interest rates.
“While the aggressive and unrelenting selling from Friday is abating, there isn’t much genuine buy demand – even the bulls want to get through some of this week’s major macro events (including China’s PMIs and the Eurozone CPI on Wed and the US jobs report on Friday) before stepping back in on the long side,” said Adam Crisafulli of Vital Knowledge, as reported by CNBC.
12.05pm: Market skid persists from Friday
The major US indices were down midday, as traders worried markets are positioned for further equity weakness.
At midday, the Dow Jones Industrial Average was down 0.4% to 32,159, the S&P 500 was down by 0.5% at 4,038, while the Nasdaq Composite was down by 0.9% at 12,037.
Edward Moya, senior market analyst at OANDA, said US stocks were declining after a weekend of global central bank hawkishness reinforced the message that global central bank tightening will deliver pain to households and businesses.
“Friday’s sharp selloff is continuing as expectations for the global energy crisis to persist, which will keep inflation risks elevated and lead to a rapid deterioration of economic data,” Moya said in a statement.
However, Moya noted that oil is the one trade everyone can agree on.
“Oil rallied on rising risks of a potential civil war that could put Libyan output at risk and over growing expectations that OPEC+ is positioning themselves to cut production. What is also helping oil today is that despite risk aversion running wild, the dollar rally is on hold,” Moya said.
West Texas Intermediate was up 3%, at US$96.27 a barrel.
At midday, the major movers included Pinduoduo up by 18.6% on better than expected quarterly results, plus oil and gas company Diamondback Energy was up by 4.2%.
On the downside, Catalent, Bristol-Meyers Squibb, and Monolithic Power Systems, all weighed down the S&P 500, falling by 8%, 5%, and 3% respectively.
9.35am: Hawkish remarks weigh on sentiment
US stocks opened lower on Monday and are expected to continue tumbling following Fed chair Jerome Powell’s hawkish speech at the Jackson Hole symposium last week.
Just after the open, the Dow Jones Industrial Average had slipped 244 points or 0.8% at 32,039 points, the S&P 500 was down 33 points or 0.8% at 4,025 points, and the Nasdaq Composite had shed 113 points or 0.9% at 12,030 points.
Cryptocurrencies also struggled with Bitcoin USD remaining below $20,000 at $19,974, while Dogecoin USD and Shiba Inu USD were both down about 0.8%.
On the flip side, NasdaqGS-listed shares of the Chinese mobile-only marketplace connecting agricultural producers and consumers Pinduoduo shot up by more than 15% after the company reported 2Q profit that more than tripled and a revenue increase above analyst expectations.
6.30am: Further sharp falls expected
US stocks looked set for further sharp falls on Monday following the brutal sell-off on Friday when Federal Reserve chairman Jerome Powell's short and blunt remarks at the Jackson Hole symposium appeared to extinguish any hopes of the central bank changing its course of aggressive rate hikes.
Futures for the Dow Jones Industrial Average were down around 0.8% in pre-market trading on Monday, while those for the S&P 500 shed 0.9%, and contracts for the Nasdaq 100 dropped 1.1%.
On Friday, the Dow posted its worst day since May, plunging 1,008 points, or just over 3%, while the S&P 500 and Nasdaq Composite fell 3.4% and 3.9%, respectively, for their worst days since June. The drop erased the August gains for all three averages.
The coming week brings more speeches from central bankers, including Fed vice chair Lael Brainard on Tuesday, before August's US non-farm payrolls (NFP) report on Friday.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank commented: "Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole meeting wreaked havoc across the equity markets on Friday. His message was crystal clear: inflation must come down even if it means pain for households and businesses in the process."
Ozkardeskaya noted that Powell also mentioned how surprisingly resilient the US jobs market is, and hinted that the Fed is tolerant for a certain cool down in the jobs figures.
"Therefore, this week’s jobs data has power to further revive the Fed hawks, rather than the contrary," she added, "Due Friday, the NFP data is expected to print another month close to 300,000 new nonfarm job additions in the US. Over the past four months, the data clearly exceeded the market expectations, especially last month, the number printed was above half-a-million new job additions, versus around 250,000 expected by analysts."
"Although, the layoff news over the past couple of months should, at some point, reflect in the US jobs data, it’s too early to titillate the Fed about the destroyed jobs. Therefore, even if we see a disappointing number, the Fed doves will be nowhere to be found and from now, we expect to see a deeper downside correction in equities, and further retracement of the summer rally," Ozkardeskaya concluded.
Contact the author at jon.hopkins@proactiveinvestors.com