Bulls Take a Breather…..

U.S. equities finished lower to snap a five-day winning streak, as investors sifted through some earnings and economic data and looked ahead cautiously to tomorrow’s key speech from Fed Chairman Jerome Powell. Uncertainty persisted regarding when the Central Bank will begin to rein in its highly-accommodative monetary policy, as well as the festering Delta variant, while news of explosions in Kabul ratcheted geopolitical uneasiness higher. In earnings news, Dow member salesforce.com, Ulta Beauty, and Williams-Sonoma all topped earnings expectations. On the economic front, jobless claims ticked higher, but its downward trend remained intact, Q2 GDP was revised slightly higher, and some regional manufacturing activity came in better than expected. Treasuries were little changed, and the U.S. dollar rebounded slightly after a recent decline from multi-month highs, while gold was slightly higher and crude oil prices traded to the downside. Europe finished mostly lower, and markets in Asia were mixed.

The Dow Jones Industrial Average fell 192 points (0.5%) to 35,213, the S&P 500 Index declined 26 points (0.6%) to 4,470, and the Nasdaq Composite decreased 96 points (0.6%) to 14,946. In light-to-moderate volume, 681 million shares were traded on the NYSE and 3.6 billion shares changed hands on the Nasdaq. WTI crude oil lost $0.94 to $67.42 per barrel. Elsewhere, the gold spot price added $2.90 to $1,793.90 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.3% to 93.06.

Weekly initial jobless claims came in at a level of 353,000 for the week ended August 21, versus the Bloomberg consensus estimate calling for 350,000 and compared to the prior week’s upwardly-revised 349,000 level. The four-week moving average decreased by 11,500 to 366,500, and continuing claims for the week ended August 14 dipped by 3,000 to 2,862,000, above estimates of 2,772,000. The four-week moving average of continuing claims fell by 108,500 to 2,901,500.

The second look (of three) at Q2 Gross Domestic Product the broadest measure of economic output, showed a quarter-over-quarter (q/q) annualized rate of expansion of 6.6%, revised from the first release’s 6.5% figure and compared to estimates of an upwardly-revised 6.7% pace of growth. Q1’s figure was unadjusted at a 6.3% increase. Personal consumption was revised to an 11.9% increase, versus expectations of an upwardly-revised 12.2% rise. Q1 consumption was unadjusted at an 11.4% gain.

On inflation, the GDP Price Index was revised to a 6.1% rise, versus estimates of an unadjusted 6.0% increase, while the core PCE Index, which excludes food and energy, was unadjusted at a 6.1% gain, in line with expectations.

The August Kansas City Fed Manufacturing Activity Index dipped by a smaller amount than expected and remained comfortably at a level depicting expansion (a reading above zero). The index decreased to 29 from July’s 30 reading, and compared to forecasts calling for a decline to 25.

Treasuries were mostly flat, as the yields on the 2-year and 10-year notes were flat at 0.24% and 1.34%, respectively, while the yield on the 30-year bond ticked 1 basis point lower to 1.94%.

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