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The mixed data on economic recovery is putting investors at the edge. US Stock Indices traded mostly flat after two consecutive days of correction.
On Thursday, August 19, investors at Wall Street got some relief after two consecutive days of deep correction. Concerns of the Federal Reserve pulling back its stimulus measures have put pressure on the market.
However, on Thursday, the broader market index S&P 500 (INDEXSP: .INX) ended in the green, 0.1% up at 4405 levels. The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) also surged 0.1% closing at 14,541 levels. On the other hand, Dow Jones (INDEXDJX: .DJI) closed 0.1% in the red at 34,894 levels.
Earlier on Wednesday, The Federal Reserve released its minutes of the meeting. The US central bank hinted that it will start tapering its $120 billion monthly bond purchase before the end of the year. In a note to clients, Art Hogan, chief market strategist at National Securities said:
“The recent bout of market angst seems to be a combination of investor vertigo, looking for an excuse to take profits, and the bumpy path of reopening the economy, with new Covid variants on the rise”.
After two consecutive days of pullbacks, even tech stocks like Netflix Inc (NASDAQ: NFLX) and Microsoft Corporation (NASDAQ: MSFT) ended in the green. However, chipmaker NVIDIA Corporation (NASDAQ: NVDA) was an outperformer in the market.
The NVDA stock jumped 3.9% giving a closing at 197.98 levels. The company reported stellar quarterly earnings for Q2 2021 beating street estimates amid strong graphic card sales. Speaking to CNBC’s Squawk Box, Ark Invests’ Cathie Wood said:
“I don’t think we’re in a bubble, which is what I think many bears think we are. We’re focused on the deflationary forces that are building up in the economy.”
Crude Oil Drops, Sectorial Stocks Perform
The WTI crude Oil Dropped more than 2% on Thursday. and settled at $63.69. Copper lost more than 2% with concerns of slowing global growth with Fed’s bond-buying support. The 10-Year Treasury Yield was also down 1.24% during the afternoon trade.
Stocks in healthcare and consumer staples were on the rise. Merck & Co Inc (NYSE: MRK) and Procter & Gamble Co (NYSE: PG) added 0.8% and 1/2% respectively. However, stocks linked to the economic movement led to losses. Devon Energy and Occidental Petroleum were down 3% and 5.8% respectively.
Shares of Robinhood Markets Inc (NASDAQ: HOOD) also tanked 10% despite releasing stellar returns for Q2 2021. The HOOD stock came down as the company issued a warning over third-quarter earnings. The company said:
“For the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter”.
There’s a flow of mixed economic data coming from the market. Wall Street giant Goldman Sachs Group Inc (NYSE: GS) has also cut down on the economic growth forecast. For the ongoing quarter, Goldman Sachs has cut down the growth forecast from 9% earlier to 5.5%. Besides, the firm has set higher inflation goals for the rest of the year.
In a note to clients, Jan Hatzius, chief economist at Goldman Sachs said: “The impact of the delta variant on growth and inflation is proving to be somewhat larger than we expected”.