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Wall Street loses ground, snapping rally on Afghanistan, Fed concerns

Stock MarketsAug 26, 2021 07:27PM ET
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© Reuters. FILE PHOTO: A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, New York, U.S., July 19, 2021. REUTERS/Andrew Kelly/File Photo

By Stephen Culp

NEW YORK (Reuters) - Wall Street closed lower on Thursday, ending a streak of all-time closing highs on concerns over developments in Afghanistan, while fears of a potential shift in U.S. Federal Reserve policy prompted a broad but shallow sell-off the day before the Jackson Hole Symposium.

All three major U.S. stock indexes ended the session in the red, with the S&P and the Nasdaq notching their first down day in six.

The sell-off firmed after hawkish commentary from Dallas Fed President Robert Kaplan and a blast outside the Kabul airport in Afghanistan helped strengthen the risk-off sentiment.

Kaplan, who is not currently a voting member of the Federal Open Markets Committee, said he believes the progress of economic recovery warrants tapering of the Fed's asset purchases to commence in October or shortly thereafter.

Kaplan's remarks followed earlier comments from the St. Louis Fed President James Bullard, who said that the central bank is "coalescing" around a plan to begin tapering process.

"(Kaplan’s statements) caused a little confusion about the taper timeline, but in my opinion the equity markets are focused on geopolitical issues," said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors in Hunt Valley, Maryland. "There’s a flight to safety during geopolitical tensions."

"I am surprised the market the market hasn’t fallen more, given the fear that it could take focus away from (U.S. President Joe Biden's) domestic agenda," Horneman added.

The economy grew at a slightly faster pace than originally reported in the second quarter, fully recovering its losses from the most abrupt downturn in U.S. history, according to the Commerce Department. But jobless claims, though still on a downward trajectory, ticked higher last week.

For an interactive GDP graphic, click here https://amers2.apps.cp.thomsonreuters.com/apps/newsservices/mediaProxy?apiKey=ecf03882-a2c2-430d-b911-728f69e9e7a3&url=https%3A%2F%2Freut.rs%2F33Po0wo.

The data did little to move the needle with respect to expectations that the Fed is unlikely tip its hand regarding the taper timeline when Chairman Jerome Powell unmutes and delivers his speech at Friday's virtual Jackson Hole Symposium.

"We’re going to see a lot of market participants analyze every word (Powell) uses, but at the end of the day, they will begin tapering," Horneman said. "I’m more concerned about the speed at which they taper. What are they going to start with? That will give us a clearer indication as whether they’re getting more hawkish."

The Dow Jones Industrial Average fell 192.38 points, or 0.54%, to 35,213.12, the S&P 500 lost 26.27 points, or 0.58%, to 4,469.92 and the Nasdaq Composite dropped 96.05 points, or 0.64%, to 14,945.81.

Of the 11 major sectors in the S&P 500, all but real estate ended the session lower, with energy stocks suffering the steepest percentage loss.

Discount retailers Dollar General Corp (NYSE:DG) and Dollar Tree Inc (NASDAQ:DLTR) slid 3.8% and 12.1%, respectively, after warning higher transportation costs will hurt their bottom lines.

Coty (NYSE:COTY) Inc jumped 14.7% after the cosmetics firm said it expects to post full-year sales growth for the first time in three years.

Salesforce.com Inc (NYSE:CRM) hiked its earnings forecast as the shift to a hybrid work model is expected to fuel strong demand. Its shares advanced 2.7%.

NetApp Inc (NASDAQ:NTAP) jumped 4.7% as brokerages raised their price targets in the wake of the cloud computing firm's better-than-expected 2022 earnings outlook.

Declining issues outnumbered advancing ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 1.83-to-1 ratio favored decliners.

The S&P 500 posted 31 new 52-week highs and two new lows; the Nasdaq Composite recorded 82 new highs and 39 new lows.

Volume on U.S. exchanges was 8.27 billion shares, compared with the 8.96 billion average over the last 20 trading days.

Wall Street loses ground, snapping rally on Afghanistan, Fed concerns
 

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Comments (20)
Chow Der
Chow Der Aug 26, 2021 8:16PM ET
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We need DT.
Dave Jones
Dave Jones Aug 26, 2021 4:43PM ET
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is joe ok? he doesn't seem like he knows what's going on!
William Smith
William Smith Aug 26, 2021 4:31PM ET
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Not to worry, staff told reporters that "Joe has been briefed". Now we can all sleep better, especially Joe.
lee doloff
lee doloff Aug 26, 2021 4:23PM ET
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Biden knows exactly how to ruin the stick market Afghanistan is going to crash the market
George Pichurov
George Pichurov Aug 26, 2021 3:49PM ET
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Taper comes soon or late.
William Smith
William Smith Aug 26, 2021 3:49PM ET
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Never.
George Pichurov
George Pichurov Aug 26, 2021 3:49PM ET
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William Smith Sure. If you live in Bolivar.
Davis Davis
Davis Davis Aug 26, 2021 3:20PM ET
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Binden's economy.
Angry Potato
Angry Potato Aug 26, 2021 3:14PM ET
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taper hopes / taper fears
Mohd Izhar Muslim
Mohd Izhar Muslim Aug 26, 2021 2:41PM ET
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hopefully will getting ups and stable always
Rob Fordham
Rob Fordham Aug 26, 2021 2:30PM ET
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We all know the fed will taper and the market will overeact
dav lo
dav lo Aug 26, 2021 2:30PM ET
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Thursday worry tap, Friday say no worry. Looping. Looping every week. All know September Fed will do it. If so fear, y ever high in the US indexes?
Whaling Trawler
Whaling Trawler Aug 26, 2021 2:03PM ET
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Gold is so contrarian and such a great safehaven asset outside the banking system that even the greasy slimy banks want to hold onto physical gold.
Millennial Metals
Millennial Metals Aug 26, 2021 1:53PM ET
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The United States Economy and financial system is such a joke
Jason Park
Jason Park Aug 26, 2021 1:50PM ET
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Biden needs to step down. He's too old to run this country
Nelson Manning
Nelson Manning Aug 26, 2021 1:41PM ET
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nobody at work ,border wide open, Afghanistan loaded to the teeth with weapons,forced vaccinations...and s&p 500 and NASDAQ at all time highs....lies on top of lies...all bsBiden a pos
Phil Ht
Phil Ht Aug 26, 2021 1:29PM ET
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Poor stability under Biden
Greg Hamilton
OptionsTrader Aug 26, 2021 1:10PM ET
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Who decides the "Reasons" why the markets moves up/down?
Sofi Lover
Sofi Lover Aug 26, 2021 1:10PM ET
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Hedge dogs
Rustam Garaev
235666 Aug 26, 2021 12:28PM ET
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Put it down correctly. The whole thing is Wall Street rises on taper worries.
dav lo
dav lo Aug 26, 2021 12:28PM ET
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exactly
Ronald Chong Kok Hoong
Ronald Chong Kok Hoong Aug 26, 2021 12:26PM ET
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tapering, but nasdaq still bullish lol
Rob Fordham
Rob Fordham Aug 26, 2021 12:26PM ET
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Why lol? Nasdaq is the future
ZS Beck
ZS Beck Aug 26, 2021 12:16PM ET
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Can the FED and all the members be the first ones to land on Mars? Getting tired of this market manipulation.
dav lo
dav lo Aug 26, 2021 12:16PM ET
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exactly
dav lo
dav lo Aug 26, 2021 12:06PM ET
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last Thursday saod the same, tapping in September, worry. Friday said wont tapping that soon coz of delta. Now say the same worry tapping? Comon, so boring and new message instead of looping? 35400 worry? Keep getting new high Dow, Nasdaq... any new drama?
YouTube Account
YouTube Account Aug 26, 2021 12:06PM ET
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too many people here called them out on their excess use of "fear" so now they have switched to "worry" or "concern". inb4 anxiety
Franco Dominguez
Franco Dominguez Aug 26, 2021 8:37AM ET
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gdp is lower
 
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