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U.S. stocks closed lower on Tuesday, ending a five-day run of record close for the Dow and the S&P 500 on disappointing July retail data and growing concerns of slowing global economic growth. All the three major indexes finished in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.8% or 282.12 points to close at 35,342.28, snapping its five-day winning streak.
The S&P 500 declined 0.7% or 31.63 points to end at 4,448.08 points. The index also ended its five-day record closing run.
Consumer discretionary and materials sectors were the worst performers. The Consumer Discretionary Select Sector SPDR (XLY) lost 2.4%, while the Materials Select Sector SPDR (XLB) declined 1.2%. Eight of the 11 sectors of the benchmark index closed in negative territory.
The fear-gauge CBOE Volatility Index (VIX) was up 11.10% to 17.91. A total of 9.5 billion shares were traded on Tuesday, higher than the last 20-session average of 9.2 billion. Decliners outnumbered advancers on the NYSE by a 2.92-to-1 ratio. On Nasdaq, a 2.51-to-1 ratio favored declining issues.
Concerns Over Global Economic Recovery Grow
Markets recovered early losses on Monday following lower-than-forecast economic data from China and growing tensions in Afghanistan. However, the concerns came haunting back on Tuesday after a disappointing U.S. retail data. Investors weighed this against the backdrop of growing fears of the delta variant of the coronavirus that has seen a surge in fresh COVID-19 cases over the past few weeks.
Moreover, geopolitical tensions linked to Afghanistan after the Taliban took control over the country further dented investors’ concern. This saw stocks taking a hit with the retail sector suffering the most.
Economic Data
Retail sales declined 1.1% in July. Analysts had expected a decline of 0.3%, which came as a big disappointment. Excluding autos, retail sales were down 0.4%. One of the major reasons behind the sharp decline was supply disruptions, which weighed on auto sales. Sales at auto dealerships fell 3.9% in July after declining 2.9% in the prior month.
Global semiconductor shortage has been a major issue for the past few months that has been hurting automakers, with several manufacturers cutting down on production.
In other economic data, the Fed Reserve reported that industrial production rose 0.9% in July the fastest pace since March.
On the other hand, the National Association of Home Builders reported that homebuilder confidence fell five points to a 13-month low of 75 in August.
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Stock Market News for Aug 18, 2021
U.S. stocks closed lower on Tuesday, ending a five-day run of record close for the Dow and the S&P 500 on disappointing July retail data and growing concerns of slowing global economic growth. All the three major indexes finished in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.8% or 282.12 points to close at 35,342.28, snapping its five-day winning streak.
The S&P 500 declined 0.7% or 31.63 points to end at 4,448.08 points. The index also ended its five-day record closing run.
Consumer discretionary and materials sectors were the worst performers. The Consumer Discretionary Select Sector SPDR (XLY) lost 2.4%, while the Materials Select Sector SPDR (XLB) declined 1.2%. Eight of the 11 sectors of the benchmark index closed in negative territory.
The tech-heavy Nasdaq fell 0.9% or 137.58 points to close at 14,656.18 points. Semiconductor stocks took a massive hit, with shares of NVIDIA Corporation (NVDA - Free Report) declining 2.5%. NVIDIA carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) was up 11.10% to 17.91. A total of 9.5 billion shares were traded on Tuesday, higher than the last 20-session average of 9.2 billion. Decliners outnumbered advancers on the NYSE by a 2.92-to-1 ratio. On Nasdaq, a 2.51-to-1 ratio favored declining issues.
Concerns Over Global Economic Recovery Grow
Markets recovered early losses on Monday following lower-than-forecast economic data from China and growing tensions in Afghanistan. However, the concerns came haunting back on Tuesday after a disappointing U.S. retail data. Investors weighed this against the backdrop of growing fears of the delta variant of the coronavirus that has seen a surge in fresh COVID-19 cases over the past few weeks.
Moreover, geopolitical tensions linked to Afghanistan after the Taliban took control over the country further dented investors’ concern. This saw stocks taking a hit with the retail sector suffering the most.
Economic Data
Retail sales declined 1.1% in July. Analysts had expected a decline of 0.3%, which came as a big disappointment. Excluding autos, retail sales were down 0.4%. One of the major reasons behind the sharp decline was supply disruptions, which weighed on auto sales. Sales at auto dealerships fell 3.9% in July after declining 2.9% in the prior month.
Global semiconductor shortage has been a major issue for the past few months that has been hurting automakers, with several manufacturers cutting down on production.
In other economic data, the Fed Reserve reported that industrial production rose 0.9% in July the fastest pace since March.
On the other hand, the National Association of Home Builders reported that homebuilder confidence fell five points to a 13-month low of 75 in August.