A pullback in the S&P 500, Nasdaq, and Dow: Positive News is Negative for Stocks

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EnclaveFX
Aug 31, 2022
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lThe S&P 500, Dow, and Nasdaq 100 hit new monthly lows. US STOCK MARKET KEY POINTS

lThe idea that the FOMC has more excellent room to hike interest rates is fueled by economic data that is better than expected.

lNFP data on Friday and European inflation data on Thursday's economic calendar will be closely watched.


Following yesterday's hold of support, the US equities markets opened the day in a positive frame of mind following Powell's address at Jackson Hole last Friday. However, favorable stock market news quickly became negative economic news. The July JOLTS employment data and the August Consumer Confidence were on today's economic calendar. The results of both surveys were better than anticipated, which reduced demand for risky assets. As the Central Bank focuses on the demand side of the economy, favorable economic conditions are considered a sign that the FED would stick with its aggressive tightening cycle.


The Dow and S&P 500 experienced losses of 0.96% and 1.10%, respectively, at the close. The energy was the sector that was slowing the decrease. Today's investors were more concerned with the consequences of rising interest rates than they were yesterday when I said that oil was supported by the idea of supply cutbacks by OPEC+ on the probability of a Nuclear Deal being signed with Iran. Not only did the FED emphasize the necessity for additional rate increases during the Jackson Hole Economic Symposium, but ECB members also hinted at the likelihood of solid tightening to control inflation at their September 8. Rising interest rates would eventually reduce consumer demand, leading to a lower price of light crude oil today below the 200-Day Moving Average. As of this writing, the WTI contract for October is about $91.7p/b.