Wall Street fights for direction on rate hike jitters

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 22, 2022. REUTERS/Brendan McDermid

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  • Snap jumps as it restructures advertising business and lays off staff
  • Netflix rises after hiring two Snap Inc executives
  • Bed Bath & Beyond sinks in corporate overhaul
  • Indices: Dow down 0.06%, S&P up 0.06%, Nasdaq up 0.15%

Aug 31 (Reuters) – U.S. stock indexes struggled to orient themselves on Wednesday and were expected to see sharp monthly declines as investors worried about the scale of the Federal Reserve’s interest rate hike to rein in inflation, while chipmakers slipped after lukewarm forecasts from Seagate and HP Inc.

The three major indexes were on course for their worst August performance since 2015, with the tech-heavy Nasdaq (.IXIC) down 3.9% after the president’s blunt and hawkish remarks were quashed. Fed Jerome Powell on Friday on keeping monetary policy tight “for a while.” hope for more modest rate hikes.

Meanwhile, mixed economic data signaling easing price pressures and a tight labor market also weighed on investors’ minds heading into September, which is typically a weak month for stock returns.

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“The conundrum facing the markets is that either the Federal Reserve needs to raise interest rates much faster, or inflation needs to start falling at a much faster pace,” said Michael Landsberg, chief financial officer. investments, Landsberg Bennett Private Wealth Management in a note.

“We don’t think the bottom has been reached for equities…as many investors focus on retesting the mid-June lows, we think the market has the potential to fall below this threshold.”

Data earlier in the day showed ADP’s private payroll rose by 132,000 jobs in August, below economists’ forecast for job growth of 288,000, according to a Reuters poll. Read more

It edged out more comprehensive and closely watched jobs data on Friday, which is expected to show nonfarm payrolls rose 300,000 last month after posting a 528,000 increase in July.

“At this point, any easing in the labor market, housing data is something the market will embrace because of the implication for the Fed,” said Ross Mayfield, investment strategy analyst at Baird in Louisville. , Kentucky.

“Markets are finding a level right now, we’ll have to wait for the next print on inflation and nonfarm payrolls to get a better idea.”

The benchmark S&P 500 index (.SPX) is up 9.7% from its mid-June lows, but remains in the bear market after falling earlier this year.

As of 12:12 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 20.43 points, or 0.06%, at 31,770.44, the S&P 500 (.SPX) was up 2.26 points, or 0.06%, to 3,988.42, and the Nasdaq Composite (.IXIC) rose 17.32 points, or 0.15%, to 11,900.46.

Chipmakers (.SOX) fell 1.1% after Seagate Technology Holdings (STX.O) cut its first-quarter profit forecast, citing macro concerns that are forcing cloud computing companies and device makers PC to reduce inventory levels. Read more

Shares of Seagate fell 2.9%, while HP Inc (HPQ.N) fell 6.1% after forecasting lower quarterly and annual profits on slowing PC sales.

Snap Inc (SNAP.N) rose 7.2% after announcing it would cut 20% of its workforce, restructure its advertising sales unit and close some projects to focus on improving sales and the number of Snapchat users. Read more

Shares of fellow social media companies Pinterest (PINS.N) and Meta Platforms (META.O) rose 3.9% and 4.4%, respectively.

Netflix Inc (NFLX.O) gained 2.9% after hiring two of Snap Inc’s top executives to help the streaming giant with its ad-supported tier plan. Read more

Chewy Inc fell 9% after the online pet supplies retailer slashed its full-year 2022 sales outlook, while PVH Corp fell 9.7% as the owner of Calvin Klein said cut its earnings outlook for 2022.

Bed Bath & Beyond Inc (BBBY.O) fell 20.8% after saying it would close 150 stores, cut jobs and revamp its merchandising strategy in a bid to turn around its loss-making business. Read more

Falling issues outnumbered advances by a 1.10-to-1 ratio on the NYSE and by a 1.01-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and nine new lows, while the Nasdaq recorded 11 new highs and 132 new lows.

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Reporting by Devik Jain and Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel

Our standards: The Thomson Reuters Trust Principles.

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