S&P 500, Nasdaq Composite look to add to record rise at Wednesday's open, but Dow stumbles

This post was originally published on this site

By Mark DeCambre and Jack Denton

Investor attention remains focused on Fed chair Powell’s Jackson Hole speech coming Friday

U.S. stock indexes early Wednesday traded flat, with the S&P 500 and Nasdaq Composite attempting to extend a record climb, amid indications of ebbing economic recovery in parts of Europe as the impact of the delta variant hobbles business activity.

Meanwhile, data showed U.S. durable-goods orders in July declined less than forecast.

What are major stock indexes doing?

On Tuesday, the Dow climbed 30 points to end at 35,366, while the S&P 500 closed at another daily record at 4,486 and the Nasdaq Composite topped 15,000 points for the first time.

What’s driving markets?

The U.S. equity rally was struggling to gain further traction higher after the S&P 500 index put in its 50th record of 2021 and the Nasdaq Composite closed above a round-number milestone above 15,000 for the first time on Tuesday.

Investors remain focused on monetary policy and the economic outlook amid a resurgence of new COVID cases as the coronavirus delta variant afflicts some U.S. states. Record-setting trade for equities has also come against the backdrop of rising inflation that has been blamed on supply chain bottlenecks and spiking demand as the economy recovers though the Federal Reserve has consistently described rising prices as likely transitory.

Federal Reserve Chairman Jerome Powell is now not expected to explicitly declare plans for tapering market-favorable bond purchases on Friday at a virtual economic symposium of central bankers hosted by the Kansas City Federal Reserve which may also buttress buying on Wall Street.

“This week’s rebound in stocks has been largely predicated on last week’s shift in tone by Dallas Fed President Robert Kaplan, in suggesting he could shift his position on a taper if the economic data deteriorated, a not unreasonable position to take,” said Michael Hewson, an analyst at broker CMC Markets.

In U.S. economic news, orders for durable goods, those lasting at least three years, slipped 0.1% last month for the second time in 15 months, the government said Wednesday, though the fall was largely due to a decline in aircraft orders. Economists polled by the Wall Street Journal had forecast a 0.5% decline. Demand was strong in other parts of the economy despite widespread shortages of materials and labor.

On top of that, House Democrats approved a $3.5 trillion budget resolution and advanced the $1 trillion bipartisan infrastructure bill, which could be viewed as adding further support to the U.S. economy.

“While the process has been protracted, yesterday showed that the fiscal-stimulus-train remains on track for the U.S. economy for the time being, and we should have a better idea of exactly how large the final package will be in a matter of weeks,” said Henry Allen, an analyst at Deutsche Bank.

In Asia, “risk appetite has weakened with markets trading lower for the most part” noted Allen, highlighting that Japan will extend a state of emergency due to COVID-19 to eight more of its 47 prefectures, bringing the total number under restrictions lasting until mid-September to 21.

A Bank of Japan policy maker also warned that the global semiconductor shortage could last through the rest of 2021 if Southeast Asian factories remain closed due to COVID-19 outbreaks.

Elsewhere, the Ifo business climate index, highlighted the weakness of Germany’s economy relative to European peers, declining for the second month in a row in August, underscoring lingering concerns about the spread of the delta variant.

“Germany’s leading indicator joins the choir of recently released leading indicators pointing to a loss of momentum in the German economy,” said Carsten Brzeski, an analyst at ING Bank.

In COVID news, Johnson & Johnson (JNJ) shared interim clinical data that indicates Americans who have received its single dose COVID-19 vaccine should get a second dose. The company said that two studies examining people who had received its shot found that a second dose boosted antibody levels. The studies haven’t yet been published in a medical journal.

-Mark DeCambre

Which companies are in focus?

How other markets are faring

 

(END) Dow Jones Newswires

08-25-21 0956ET

Copyright (c) 2021 Dow Jones & Company, Inc.