The Stock Market This Week: August 24-28
The Stock Market This Week: August 24-28
By: Stacey Nickens
On Monday, major indexes climbed after the FDA granted emergency-use authorization of a convalescent plasma treatment for serious COVID-19 cases. The S&P 500 rose 1%. The Dow Jones gained 1.4%, and the Nasdaq climbed 0.6%. Cyclical stocks responded positively to the news. Financials, industrials, materials, and energy all made significant gains. Energy was up 2.8% even though many oi producers are temporarily closing Golf Coast oil refineries ahead of two tropical storms. The health care sector was the only sector to finish in the negative. Earlier in the day, mega-cap stocks advanced rapidly but eventually dipped when there wasn’t commensurate buying interest. Investors bought into this dip, helping these stocks. Though many mega-caps still finished far away from session highs.
On Tuesday, mega-cap stocks pushed the S&P 500 forward 0.4% and the Nasdaq forward 0.8%. However, the Dow Jones declined 0.2%. At the beginning of the day, cyclical stocks continued their strong performance from yesterday; however, when August’s Consumer Confidence Index declined, cyclical stocks also took a hit. The Consumer Confidence Index dropped to 84.8, the lowest it has been since May 2014. The low reading suggests that consumers may reduce spending moving forward. By the end of the day, energy, utilities, and three other sectors finished in the negative. Yet strong performances from Amazon, Facebook, and Alphabet helped parts of the market rally. Salesforce, Amgen, and Honeywell also made gains after it was announced that they would replace ExxonMobil, Pfizer, and Raytheon Technologies in the Dow before open on August 31. The move comes after Apple announced their 4:1 stock split, which will decrease the Dow’s exposure to technology. In other economic news, July home sales soared to a seasonally-adjusted 901,000. This sales pace exceeds January’s pre-pandemic levels.
On Wednesday, major indexes climbed with the help of technology stocks and strong economic data. The S&P 500 rose 1%. The Nasdaq gained 1.7%, and the Dow Jones added 0.3%. With these gains, the S&P 500 continues its upward trajectory, a trajectory that points to reduced overall volatility in the stock market. This reduction in stock turbulence is evidenced by the Cboe Volatility Index recently hitting its lowest level since the pandemic began impacting markets. In economic news, durable goods orders rose over 11% in July and more than doubled what was expected of them. The market rode higher on this news and was additionally supported by strong performances from Netflix and Facebook. Salesforce, which will be added to the Dow before open on August 31, also made significant gains in daily trading. With these moves, communication services, information technology, and consumer discretionary led the charge today. Comparatively, utilities, energy, and real estate dropped. Moving forward, energy may be particularly impacted by the closing of refineries due to tropical storms that may impact Texas and Louisiana.
On Thursday, the S&P 500 increased 0.2% and touched the 3500 level for the first time. The Dow Jones gained 0.6%, and the Nasdaq declined 0.3%. Financial stocks led the way after Fed Chair Powell announced a shift in the Fed’s inflation policy. He said the Fed would let inflation run slightly beyond 2.0% over time in order to compensate for years when inflation ran below 2.0%. Beyond the financial sector, real estate, health care, and consumer staples also made gains during daily trading. Communication services, consumer discretionary, and materials dropped. Microsoft and Walmart were both up after news that the two companies may be acquiring TikTok US together. Abbot Labs also made daily gains after the FDA granted the company emergency use authorization for their COVID-19 antigen test. With the exception of Microsoft and Tesla, mega-cap stocks largely underperformed on Thursday. In economic news, initial jobless claims for the week ending in August 22 decreased to 1.006 million. Continuing claims for the week ending in August 15 also decreased to 14.5 million. The second estimate for Q2 GDP pointed to output falling at an annualized rate of 31.7%, a small improvement from the advanced estimate.
On Friday, strong economic data spurred the market onward. The S&P 500 rose 0.7% to finish with its best weekly performance since early July. The Dow turned slightly positive for the year after adding 0.6% in daily trading. The Nasdaq also gained 0.6% to close at a record high. All 11 S&P 500 sectors made positive growth. Energy, materials, and information technology were the strongest performers. The announced increase in personal income and personal spending in July seemed to partially be the catalyst for the market’s upward trajectory. Indeed, the data seemed to help casinos, airlines, hotels, and other stocks dependent on reopening. MGM Resorts gained nearly 5% despite announcing a plan to lay off 18,000 employees. In individual company news, Workday, HP Inc., and VMWare all made gains after reporting positive quarterly earnings.
Check back daily for updates. For more information on stock market performance this week, subscribe to ELM3’s Weekly Market Update.
