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U.S. stock markets closed lower on Tuesday following market participants’ concern regarding a near term recession. Investors also remained skeptical regarding the next move of the Fed with respect to interest rate hike in its ongoing July FOMC. Weak economic data also dented investors’ confidence. All the three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 0.7% or 228.50 points to close at 31,761.54. Notably, 18 components of the 30-stock index ended in negative territory while 12 in green. This was the worst daily performance of the blue-chip index since Jun 30.
The tech-heavy Nasdaq Composite finished at 11,562.57, sliding 1.9% or 220.09 points due to weak performance of large-cap technology stocks. The tech-laden index declined for the third consecutive day.
The S&P 500 fell 1.2% to end at 3,921.05. Three out of 11 broad sectors of the benchmark index closed in positive zone while eight ended in red. The communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY), the Financials Select Sector SPDR (XLF) and the Technology Select Sector SPDR (XLK) plummeted 2%, 3.2%, 1.4% and 1.6%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 5.7% to 24.69. A total of 9.6 billion shares were traded Tuesday, lower than the last 20-session average of 10.93 billion. Decliners outnumbered advancers on the NYSE by a 1.73-to-1 ratio. On Nasdaq, a 1.72-to-1 ratio favored declining issues.
Walmart Pulls Down Wall Street
On Jul 25, after the closing bell, retail behemoth Walmart Inc. (WMT - Free Report) said that its second quarter and full year 2022 adjusted earnings per share will decline 8% to 9% and 11% to 13%, respectively. The poor performance was attributed to mounting food inflation, which forced Americans to spend more on food items and reduce spending on general merchandise, especially apparels.
Market participants remained concerned that a cut in Walmart’s profit outlook may be considered as a signal of an upcoming U.S. economic recession. Notably, consumer spending constitutes nearly 70% of the U.S. GDP. Any deterioration of this metric is bound to hurt the U.S. economic growth.
The crucial July FOMC meeting of the Fed has started from Tuesday. On Jul 27, after the conclusion of the meeting, Fed Chairman Jerome Powell will brief investors community regarding the decision of the meeting. Some economists and financial experts believe that the central may raise the benchmark interest rate by 1% instead of 75 basis points to combat mounting inflation.
Economic Data
The Department of Commerce reported that the new home sales plummeted 8.1% to a seasonally-adjusted rate of 590,000 in June, lagging the consensus estimate of 669,000. May’s data was revised downward to 642,000 from 696,000 reported earlier.
The S&P CoreLogic Case-Shiller 20-city index rose to a seasonally adjusted 1.5% in May. April’ data was revised downward to 2.2% from 2.3% reported earlier. The 10-city index rose to a seasonally adjusted 1.4% in May. April’ data was revised downward to 2.1% from 2.2% reported earlier.
The Conference Board reported that consumer confidence in July fell to a one and half year low of 95.7%, missing the consensus estimate of 97%. June’s data was revised downward to 98.4% from 98.7% reported earlier. The Present Situation Sub-index fell to 141.3% in July from 147.2% in June. The Expectations sub-index for next three months fell to 65.3% in July from 65.8% in June.
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Stock Market News for Jul 27, 2022
U.S. stock markets closed lower on Tuesday following market participants’ concern regarding a near term recession. Investors also remained skeptical regarding the next move of the Fed with respect to interest rate hike in its ongoing July FOMC. Weak economic data also dented investors’ confidence. All the three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 0.7% or 228.50 points to close at 31,761.54. Notably, 18 components of the 30-stock index ended in negative territory while 12 in green. This was the worst daily performance of the blue-chip index since Jun 30.
The tech-heavy Nasdaq Composite finished at 11,562.57, sliding 1.9% or 220.09 points due to weak performance of large-cap technology stocks. The tech-laden index declined for the third consecutive day.
The S&P 500 fell 1.2% to end at 3,921.05. Three out of 11 broad sectors of the benchmark index closed in positive zone while eight ended in red. The communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY), the Financials Select Sector SPDR (XLF) and the Technology Select Sector SPDR (XLK) plummeted 2%, 3.2%, 1.4% and 1.6%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 5.7% to 24.69. A total of 9.6 billion shares were traded Tuesday, lower than the last 20-session average of 10.93 billion. Decliners outnumbered advancers on the NYSE by a 1.73-to-1 ratio. On Nasdaq, a 1.72-to-1 ratio favored declining issues.
Walmart Pulls Down Wall Street
On Jul 25, after the closing bell, retail behemoth Walmart Inc. (WMT - Free Report) said that its second quarter and full year 2022 adjusted earnings per share will decline 8% to 9% and 11% to 13%, respectively. The poor performance was attributed to mounting food inflation, which forced Americans to spend more on food items and reduce spending on general merchandise, especially apparels.
Market participants remained concerned that a cut in Walmart’s profit outlook may be considered as a signal of an upcoming U.S. economic recession. Notably, consumer spending constitutes nearly 70% of the U.S. GDP. Any deterioration of this metric is bound to hurt the U.S. economic growth.
Consequently, shares of Walmart tumbled 7.6%. Shares of other major retailers such as The TJX Companies Inc. (TJX - Free Report) and Target Corp. (TGT - Free Report) dropped 4.2% and 3.6%, respectively. Walmart and The TJX Companies carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fed FOMC Meeting in Focus
The crucial July FOMC meeting of the Fed has started from Tuesday. On Jul 27, after the conclusion of the meeting, Fed Chairman Jerome Powell will brief investors community regarding the decision of the meeting. Some economists and financial experts believe that the central may raise the benchmark interest rate by 1% instead of 75 basis points to combat mounting inflation.
Economic Data
The Department of Commerce reported that the new home sales plummeted 8.1% to a seasonally-adjusted rate of 590,000 in June, lagging the consensus estimate of 669,000. May’s data was revised downward to 642,000 from 696,000 reported earlier.
The S&P CoreLogic Case-Shiller 20-city index rose to a seasonally adjusted 1.5% in May. April’ data was revised downward to 2.2% from 2.3% reported earlier. The 10-city index rose to a seasonally adjusted 1.4% in May. April’ data was revised downward to 2.1% from 2.2% reported earlier.
The Conference Board reported that consumer confidence in July fell to a one and half year low of 95.7%, missing the consensus estimate of 97%. June’s data was revised downward to 98.4% from 98.7% reported earlier. The Present Situation Sub-index fell to 141.3% in July from 147.2% in June. The Expectations sub-index for next three months fell to 65.3% in July from 65.8% in June.