The Stock Market This Week: August 31-September 4
The Stock Market This Week: August 31-September 4
By: Stacey Nickens
On Monday, the S&P 500 declined 0.2% in daily trading though still posted a 7% gain for the month. Overall, technology stocks outperformed cyclicals with energy, materials, financials, and industrials all declining. Apple and Amazon helped information technology and consumer discretionary make positive gains. Apple, along with Tesla, had their stock split go into effect today, and the companies rose 3.4% and 12.6% in daily trading, respectively. Amazon also climbed 1.5% after the FAA certified their new drone delivery unit. Conversely, Walmart dragged the Dow Jones down. The index dropped 0.8% in daily trading. Walmart, Microsoft, and Oracle all fell after China announced new export restrictions that may complicate their ability to acquire TikTok. Even still, CNBCÂ reported that a TikTok acquisition deal may be revealed as early as Tuesday. With the help of the tech sector, the Nasdaq rose 0.7% in daily trading. The health care and utilities sectors also made growth.
On Tuesday, all major indexes rose after the ISM released strong manufacturing data for July. The Nasdaq rose 1.4% with the help of mega-caps and growth stocks. Both the S&P 500 and Dow Jones climbed 0.8%. The ISM Manufacturing Index for August increased to 56%. This reading points to continued expansion in a sector that was hit hard by the pandemic. This growth was buoyed by increased demand and faster exports, making August the third straight month the manufacturing index has seen growth. The data helped materials and industrials see positive growth in daily trading. Mega-caps and growth stocks also had a strong day. Walmart shares advanced after the company introduced their subscription service, Walmart+. Zoom was up 40.8% after they blew out second quarter earnings expectations on Monday afternoon, and both Netflix and Docusign followed Zoom on its upward trajectory. With these moves and others, information technology, communication services, and consumer discretionary finished in the green. Utilities, health care, and energy fell in daily trading.
On Wednesday, both the S&P 500 and Nasdaq set records, rising 1.5% and 1.0% respectively. The Dow Jones also climbed 1.6%. Ten of the 11 S&P 500 sectors made gains in daily trading. Only energy closed in the negative due to a drop in oil prices. The strong day of trading wasn’t deterred by Apple, Tesla, and Zoom Video stocks all declining. Conversely, NVIDIA, Costco, and Peloton all had their price targets raised on Wednesday by various analysts. In economic news, factory orders increased in July, demonstrating that businesses continue to re-up spending. However, the ADP employment change report estimated only 428,000 jobs were added to the private-sector in August. With more jobs added in May and June, this suggests businesses were slowing down hiring rates near the end of the summer.
On Thursday, major indexes tumbled as the overheated market began to cool. The S&P 500 dropped 3.5%. The Nasdaq fell 5%, and the Dow Jones slipped 2.8%. There didn’t seem to be a specific reason for this event, which suggests that investors are selling off to take gains from the steep advancements in recent days. All 11 S&P 500 sectors fell in daily trading, but the information technology and consumer discretionary sectors were hit the hardest. Mega-cap and growth stocks underperformed compared to value stocks. As such, the energy sector declined the least with only a 0.7% drop. The Chicago Fed President Charles Evans encouraged Congress to pass more fiscal stimulus, noting that the economy was unlikely to fully recover before late 2022. In other economic news, initial claims for the week ending in August 29 dropped to 881,000. This is the lowest level since the week ending in March 14. Continuing claims for the week ending in August 22 also dropped. The July trade deficit increased to $63.6 billion, with both export and import activity increasing.
On Friday, major indexes declined again as mega-cap and growth stocks continued to struggle. However, a buy-the-dip mindset hit during the middle of the day and helped minimize some of the losses. The S&P 500 was down 3.1% but was able to eventually climb back up. The index finished with only a 0.8% dip. Similarly, both the Nasdaq and Dow Jones moved away from their lowest points in daily trading to finish with losses of 1.3% and 0.6%, respectively. Apple’s performance helped some of the indexes. At one point their shares were down 8.3%, but as investors bought into the reduced-price stock, Apple climbed back up to make a 0.1% gain. The improved unemployment report for August also helped the market. August’s unemployment rate came in at 8.4%, and both nonfarm payrolls and private sector payrolls increased. Average hourly earnings also increased.
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