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S&P 500, Dow Cuts Losses to Close at Record Highs Ahead of Powell

Stock MarketsAug 16, 2021 04:30PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 and Dow cut intraday losses to close at record highs on Monday, as rising megacap tech stocks offset weakness in economically-sensitive cyclical stocks amid concerns about slowing global growth just a day ahead of a potential update on monetary policy from Federal Reserve Chairman Jerome Powell.   

The S&P 500 rose 0.3% to a new record intraday high of 4,479.26. The Dow Jones Industrial Average gained 0.3%, or 110 points, to 35,625.40. The Nasdaq was down 0.20%.

Energy fell more than 1%, dragging the broader the market lower, as oil prices slumped on demand concerns after softer economic data from China triggered concerns about the global recovery.

"In the short term, concerns about the spread of the Delta variant in China, and the effects this will have on oil demand, are continuing to weigh on prices," Commerzbank (DE:CBKG) said in a note. "These concerns were additionally fueled by data published overnight in China: industrial production turned out to be significantly softer than anticipated."

In another sign of slowing growth, The August Empire State index fell to 18.3 from 43.0 in July, missing economists' estimates of 28.5.

Treasury yields slipped on global growth concerns, pushing banking stocks sharply lower. Declining interest rates are the enemy of banks as they reduces their net interest margin.

JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) slipped less than 1%. 

But yields aren't expected to fall for a prolonged period because of a robust labor market, and the expected tightening of Federal Reserve monetary policy. 

"We are not losing confidence in our view that US Treasury yields and the US dollar are headed higher. Labor market strength and a powerful wealth effect should prevent the same loss of confidence in other household measures that was seen in the University of Michigan survey," Morgan Stanley (NYSE:MS) said in a note, adding that the "Fed taper [is] on tap."

Industrials were above the flatline, however, as defense companies including Parker-Hannifin (NYSE:PH), L3Harris Technologies (NYSE:LHX), and Leidos (NYSE:LDOS) climbed.   

Technology stocks, often a benefactor of falling yields, gained as megacap tech was mostly higher. 

Microsoft (NASDAQ:MSFT, Facebook (NASDAQ:FB), and Apple (NASDAQ:AAPL), Google-parent Alphabet (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN) were higher.

Sonos (NASDAQ:SONO), meanwhile, jumped 4% after a judge ruled that Alphabet's Google had infringed on some of the company's patents. An important ban could be imposed for some of Google's Pixel smartphones and Nest audio speakers.

In earnings news, oat milk producer Oatly (NASDAQ:OTLY) reported quarterly results that fell short of Wall Street estimates on both the top and bottom lines. The company also announced plans to boost oat base production, citing increased demand. Its share price was fell about 3%.

In other news, Tesla (NASDAQ:TSLA) fell more than 4% after the U.S. government launched an investigation into the safety of the electric automaker's driver assistance system after multiple of crashes during the last three years.

Looking ahead to Tuesday, investors will be watching for fresh clues on monetary policy, with a town hall by Powell that potentially could lay out the carpet for a further signal on tapering expected at the Jackson Hole, Wyo., symposium next week. 

S&P 500, Dow Cuts Losses to Close at Record Highs Ahead of Powell
 

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Comments (8)
perplexed76 .
perplexed76 . Aug 16, 2021 11:19PM ET
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Power (antonym Powell) - the capacity or ability to direct or influence the behaviour of others or the course of events
Bernard Tan
Bernard Tan Aug 16, 2021 8:28PM ET
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Only way to raise interest rates is a new Fed Chair in Feb 2022….
Steven Jacobs
Steven Jacobs Aug 16, 2021 8:28PM ET
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When even common folk are calling for higher interest rates that’s when you know for sure the media has you right where they want you.
Jokers R Us
Jokers R Us Aug 16, 2021 6:31PM ET
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Are they still thinking about thinking about thinking about raising rates?
Me comment
Me comment Aug 16, 2021 6:31PM ET
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No tapering.
Pham Ngoc Tien
Pham Ngoc Tien Aug 16, 2021 6:20PM ET
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powell is a name of money printer
jason xx
jason xx Aug 16, 2021 5:16PM ET
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Theres no tapering "on tap" Powell has said it a million times.
Ross Dre
Ross Dre Aug 16, 2021 5:16PM ET
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Yep.. no tapering…. Theyre gonna use their unlimited tools… yada yada
Ross Dre
Ross Dre Aug 16, 2021 5:13PM ET
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The pic indicates that wallstreet was nervous… that’s an old pic. Wall street was actually laughing at the drop… they know they get fake money when things start to turn extremely sour.
lvh offical
lvh offical Aug 16, 2021 4:52PM ET
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hello
Coco Bongo
Coco Bongo Aug 16, 2021 4:52PM ET
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hallo
Shantanu Roy
Shantanu Roy Aug 16, 2021 4:49PM ET
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.com bubble 2.0
Jokers R Us
Jokers R Us Aug 16, 2021 4:49PM ET
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Except unlike the dotcom bubble there will be no rise in rates
Joel Schwartz
Joel Schwartz Aug 16, 2021 4:49PM ET
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Worse. Burrito chains weren’t trading at 92+ P/E back then. $CMG
 
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