Nasdaq and Dow Jones Surge as U.S. Economic Indicators Show Mixed Signals: Home Depot Faces Sales Decline

A minute after trading began on the New York stock exchange, the Nasdaq index has risen 1.0 percent and is at 16,954.297 points, while the Dow Jones rises 0.4 percent to 39,505.93 points. The S&P 500 rose 0.7 percent to 5,380.96 points.

Macro

The National Federation of Independent Business’ sentiment index ended at 93.7 points in July, up from 91.5 points in June. According to Trading Economics, an index of 91.7 points was expected.

At the same time, it has been known that producer prices (PPI) in the US was up 0.1 percent monthly and 2.2 percent annually in July. According to Trading Economics, the expectations were ahead of 0.2 percent and 2.3 percent respectively, after measurements of 0.2 and 2.7 percent the previous month.

Home Depot is punished

Home Depot fell 1.7 percent after the company’s quarterly presentation. Although Home Depot delivered better-than-expected numbers, management said full-year sales are likely to fall 3-4 percent compared to last year.

According to CNBC, Home Depot has previously reported a one percent decline in sales.

The ten-year US government bond yield is at 3.87 percent, while the VIX index, also known as the fear index, is falling 4.4 percent to 19.80.

VIX

The VIX index rose to 65.73 due to the collapse of the global stock market at the beginning of last week. This was the highest level for the fear index since the Covid-19 pandemic, when it rose to 85.47, and also the second highest level since the peak of 89.53 was reached at the end of 2008.

If the history of previous outbreaks of volatility is repeating itself, Bank of America Securities thinks so The S&P 500 could be in for a rough few months. According to CNBC, the strategists write in an update that the S&P 500 is often at a two-month low after the fear index is above 45.

Eight weeks after such volatility, the S&P 500 index is higher in only 40 percent of cases, while figures from Bank of America show the average decline is 0.72 percent.

slow down

According to Handelsbanken, fears of a major slowdown are increasing, especially in the US.

“But so far we think there is no question of a real recession, just a recession. After the somewhat alarming labor market report, we have seen slightly better figures from the US again: the ISM index for the service sector rose slightly more than expected in July, and is -again in expansion territory,” wrote chief economist Marius Gonsholt Hov in a Handelsbanken report.