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Stock Market News for Aug 9, 2023

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U.S. stocks retreated on Tuesday but managed to finish off session lows as concerns grew over the health of U.S. banks and the economy after credit rating agency Moody’s downgraded several major lenders and trade data out of China came in disappointing. All three major indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) declined 0.5% or 158.64 points to end at 35,314.49 points. The blue-chip index had shed 466 points at its session low.   

The S&P 500 fell 0.4% or 19.06 points to finish at 4,499.38 points. Financial, consumer discretionary and tech stocks were the biggest losers.

The Consumer Discretionary Select Sector SPDR (XLY) shed 0.8%. The Financials Select Sector SPDR (XLF) gave up 0.9%, while the Technology Select Sector SPDR (XLK) dropped 0.8%. Eight of the 11 sectors of the benchmark index ended in negative territory.

The tech-heavy Nasdaq fell 0.8% or 110.07 points to close at 13,884.32 points.

The fear-gauge CBOE Volatility Index (VIX) was up 1.40% to 15.99. A total of 10.94 billion shares were traded on Tuesday, in line with the last 20-session average.

Moody’s Downgrades U.S. Banks

Stocks took a beating on Tuesday as concerns grew over the health of the nation’s banks and economy after Moody’s downgraded the credit ratings of 10 small-to-mid-sized regional lenders, including M&T Bank Corporation ((MTB - Free Report) ).

The credit rating agency cited deposit risk, struggling commercial real estate portfolios and fears of an impending recession behind the downgrade. Besides, it also kept Bank of New York Mellon ((BK - Free Report) ), US Bancorp, State Street Corporation ((STT - Free Report) ) and Truist Financial Corporation ((TFC - Free Report) ) on review for potential downgrades.

Stocks retreated following the announcement, led by a selloff in financial stocks. Shares of The Goldman Sachs Group, Inc. ((GS - Free Report) ) declined 2.1%, while JPMorgan Chase & Co. ((JPM - Free Report) ) fell 0.6%. JPMorgan Chase & Co carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

China Trade Data Disappoints

Fears escalated further on Tuesday after weak trade data out of China showed that the world’s second-largest economy slipped in deflation. Exports in China plummeted 14.5% in July from the year-ago period. This is the biggest decline since the COVID-19 outbreak in February 2020 when imports fell 12.4%.

Following that, assets sensitive to demand in China such as industrial commodities like copper took a hit.

Investors also closely watch a batch of companies report their corporate results as the second-quarter earnings season entered its last leg. United Parcel Service, Inc. ((UPS - Free Report) ) second-quarter 2023 earnings on Tuesday. The company’s shares fell 0.9% after it reported revenues of $22,055 million, which fell short of the Zacks Consensus Estimate of $22,879.7 million and also declined 10.9% year over year.

Investors are now waiting for the July inflation reading. The Consumer Price Index and the Producer Price Index reading are due to be out on Thursday and Friday, respectively.

No major economic data was released on Tuesday.

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