US Stocks Journal｜The Federal Reserve may continue to raise interest rates, and the three major indexes are all down
The three major U.S. stock indexes fell across the board. The Federal Reserve released the minutes of its July interest rate meeting. The minutes pointed out that inflation was still too high, which made the market worry that it will continue to raise interest rates in the future. After the release of the minutes, the three major indexes fell further.
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August 16 (Wednesday) Market Conditions
l The Dow Jones Industrial Average fell 180.65 points, or 0.52%, to 34,765.74 points.
l The S&P 500 index fell 33.53 points, or 0.76%, to 4,404.33 points.
l The Nasdaq index fell 157.28 points, or 1.15%, to 13,474.63 points.
l New York September crude oil closed at $79.39 a barrel, down $1.61 or 2%.
l New York gold futures for October delivery closed at US$1,909.80 an ounce, down US$6.7, or 0.35%.
l The US 10-year Treasury yield closed at 4.258%, up 3.7 pips.
The market focuses on the minutes of the Fed’s July meeting on interest rates. The minutes of the meeting stated that most Fed officials believed that there was a “significant” upside risk to inflation. “Participants stated that inflation was unacceptably high and that more evidence was needed to convince people that price pressures were receding.”
According to the minutes of the meeting, although the imbalance between supply and demand in the labor market has been gradually reduced in the first half of this year, it is still very tight. In the second quarter, total non-farm payrolls posted the slowest monthly average gain since the economic recovery began in mid-2020, though job growth remained strong compared with pre-pandemic levels.
Several participants warned of the risk of accidentally overtightening policy.
After the announcement of the minutes of the meeting, the market became more cautious, and the three major indexes fell further.
Retailer Target, which reported results on Wednesday, lowered its full-year forecast and missed its second-quarter sales forecast, but shares still closed about 3 percent higher.
Berkshire disclosed that in the second quarter it purchased two homebuilding stocks, DR Horton worth $726 million and Lennar worth $17.2 million, but Morningstar said, “According to our indicators today, the current stock price has fully reflected its value.”
Morningstar pointed out that DR Horton’s fair valuation is US$120, which is lower than Wednesday’s price of about US$123; Lennar’s fair valuation is set at US$133, which has about 8% upside from Wednesday’s closing price of about 123 yuan.
Wolfe ResearchRob Ginsberg believes that stocks have lost momentum because they are overbought. Deeply overbought for the first time since early last year. The S&P 500 hasn’t reached that level yet, but we’d be very surprised if it didn’t follow in the Nasdaq’s footsteps.”
2023-08-16 22:16:40
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