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Stock Market News for Aug 16, 2022

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U.S. stock markets closed higher on Monday to start a new week on the back of a four-week winning streak. Market participants ignored weak economic data of China and the United States. All the three major stock indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) advanced 0.5% or 151.39 points to close at 33,912.44.  The blue-chip index recorded its longest winning streak since May 27. Notably, 22 components of the 30-stock index ended in positive territory while 8 in red.

The tech-heavy Nasdaq Composite finished at 13,128.05, rising 0.6% due to strong performance of large-cap technology stocks. Major gainer of the tech-laden index was Illumina Inc. (ILMN - Free Report) , shares of which climbed 8.8%. Illumina carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 rose 0.4% to end at 4,297.14. Eight out of the 11 broad sectors of the index closed in positive zone while three in red. The Consumer Staple Select Sector SPDR (XLP) gained 1% while the Energy Select Sector SPDR (XLE) tanked 2%.

The fear-gauge CBOE Volatility Index (VIX) was up 2.2% to 19.95. A total of 9.59 billion shares were traded Monday, lower than the last 20-session average of 10.97 billion. Advancers outnumbered decliners on the NYSE by a 1.09-to-1 ratio. On Nasdaq, a 1.38-to-1 ratio favored advancing issues.

Weak Economic Data Fail to Stop Rally

Economic growth in China has been disappointing of late, with Industrial Production came in at 3.8% year over year, missing expectations of 4.6%, while Retail Sales reached only 2.7% from 5.0% expected. China’s economic downturn now looks wider and deeper than initially thought, with Property Investment tumbled12.3% year over year and New Property Sales  plummeted 28.9%.

In the United States, the National Association of Home Builders/Wells Fargo Housing Market Index dropped 6 points to 49 this month, marking its eighth straight monthly decline. Any reading below 50 is considered negative.

The sub-index for current sales conditions fell 7 points to 57, sales expectations in the next six months declined 2 points to 47 and buyer traffic decreased 5 points to 32. An ultra-hawkish Fed with higher interest rate regime and tighter monetary control along with rising construction costs are primary reasons for negative sentiments.

Inflation Inches Down in July

The Department of Labor reported that Consumer price index (CPI) for July remained flat with June. However, year over year, CPI increased 8.5% in July compared with 9.1% in June. The decline was primarily due to a 4.6% drop in energy prices, especially, the gasoline price fell 7.7%. However, food prices rose 1.1% in July.

The core CPI (excluding volatile food and energy items) increased 0.3% in July compared with 0.7% in June. The consensus estimate was 0.5%. Year over year, core CPI appreciated 5.9%, below the consensus estimate of 6.1%.

The producer price index (PPI) declined 0.5% in July compared with the consensus estimate of a rise of 0.2%. The data for June was revised downward to a rise of 1% from 1.1% reported earlier. Year over year, the PPI climbed 9.8%, the lowest rate since October 2021. That compares with an 11.3% increase in June and the record 11.7% gain in March.  

The core PPI (excluding food, energy and trade services) declined 0.2% in July compared with the consensus estimate of a rise of 0.4%. The data for June was revised downward to a rise of 0.4% from 0.5% reported earlier. Year over year, core PPI appreciated 5.8%.

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