The major U.S. stock indexes fell around 3% to 4%, marking the third weekly setback in a row for the $S&P 500(.SPX)$. The decline was steepest for the $NASDAQ(.IXIC)$ , which has fallen nearly 11% over the past three weeks.
As of last Friday,$DJIA(.DJI)$ YTD is -12.5%,$NASDAQ(.IXIC)$ YTD is -25.3%,$S&P 500(.SPX)$ YTD is -16.8%. $S&P/ASX 200(XJO.AU)$ &$Straits Times Index(STI.SI)$ in YTD performance is -8.09% & 2.97% respectively.
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The three major U.S. stock indexes fell to their lowest levels since July. The latest non-farm payrolls report did not settle the suspense of the FED's decision this month. Facing a new round of geopolitical and economic downside risks, investors chose to stay on the sidelines before the long weekend holiday.
According to the AAII survey of the American Association of Individual Investors, the net bearish ratio of U.S. stocks rose sharply from 3.3% to 28.5% last week. The recent increase in the volatility of growth stocks and group stocks that retail investors have actively participated in has become an important reason for the decline in market confidence.
Binky Chadha, Deutsche Bank chief global strategist, warned that investors could be squeezed by another bear market rally.
Peter Oppenheimer, chief global equity strategist at Goldman Sachs, believes that the soft landing of the U.S. economy that stock market bulls are looking for is unlikely given the continued rise in inflation and the risk of a global slowdown.
As the September interest rate meeting is approaching, the assessment of monetary policy will continue to be a disturbing factor, and the long-short game is gradually heating up.
Sectors & Stocks Performances Review:
Judging from the performance of the sectors last week, all sectors fell, and the raw materials sector fell the most. In terms of individual stocks, $Apple(AAPL)$ ,$Alphabet(GOOG)$ , $Amazon.com(AMZN)$ , and $Microsoft(MSFT)$ fell by 2% to 4% respectively.
Weekly Top Gainners of S&P 500：
$DXC Technology Company(DXC)$ ,$Cardinal Health(CAH)$ ,$Bath & Body Works Inc.(BBWI)$ , $Ulta Salon Cosmetics & Fragrance(ULTA)$ , $Dollar General(DG)$ ,$Target(TGT)$ , $Gilead Sciences(GILD)$ , $AES Corp(AES)$ , $MarketAxess(MKTX)$ .
Macro Factors to Focus:
Jobs Consistency: The U.S. labor market didn’t generate new jobs in August at the same rapid clip that it did in July, but the latest month’s gain of 315,000 was slightly above most economists’ expectations. The unemployment rate rose to 3.7% from 3.5%, but that increase stemmed in part from a rise in Americans entering the labor force by seeking employment.
Earnings Scorecard: Companies in the S&P 500 posted an average second-quarter earnings gain of 6% over the same quarter a year earlier, according to FactSet data from the recently concluded earnings season. That result marked the slowest growth rate since the fourth quarter of 2020.
Surging 10-year Yield: Growing expectations for further sharp interest-rate increases weighed on prices of U.S. government bonds, sending the yield of the 10-year U.S. Treasury bond up for the fifth week in a row. The yield climbed to around 3.20% on Friday, up from 2.64% at the end of July.
Other Markets:
2-year Yield Spike: Before closing the week at 3.40%, the yield of the 2-year U.S. Treasury bond on Thursday climbed to 3.52%, the highest level since 2007. The 2-year yield is especially sensitive to the near-term outlook for U.S. Federal Reserve policy and expectations for another big interest-rate increase to be announced on September 21.
Oil Pullback: U.S. crude oil was trading around $87 per barrel on Friday, dropping more than 6% for the week. Concerns about softening global demand weighed on the price, in part owing to renewed economic restrictions in China to fight COVID-19 outbreaks in some cities.
Currency Divergence: Japan’s yen was trading at around 140 to the U.S. dollar on Friday, its lowest level since 1998. The yen’s value relative to the dollar has fallen around 18% year to date, in part reflecting expectations of higher interest rates in the United States and Japan’s continued embrace of a low-rate policy.
Gold Decline: Gold prices fall for the third week in a row! Gold futures $Gold - main 2212(GCmain)$ prices fell 1.55% last week. Gold prices may still have room for a long-term decline due to strong dollar under rake hike.
The Week Ahead: September 5-9
Monday
- Labor Day holiday, U.S. financial markets closed
Tuesday
- Institute for Supply Management’s nonmanufacturing index
Wednesday
- Trade balance, U.S. Census Bureau
Thursday
- Consumer credit, U.S. Federal Reserve
- Weekly unemployment claims, U.S. Department of Labor
Friday
- Wholesale inventories, U.S. Census Bureau
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