Market Recap – A look at the markets after the Labor Day Weekend U.S.

You may already be aware that our financial markets here in Australia and around the world are so closely intertwined that any event, decision or political movement in the U.S. may affect us directly or indirectly in the way we see the markets, our investments and opportunities on our day-to-day basis. Therefore, it is very important that as an investor you keep taps, your ear to the ground and your finger on the pulse of the American Economy.

Today we look at how the markets have fared after Labor weekend. The U.S. markets have been very busy of late, with the Non-Farm Employment Change coming hot on the heels of the Jackson Hole meetings the previous week and Labor Day weekend just gone.

U.S. stock indexes fell Wednesday, driven by expectations for tighter Federal Reserve policy and an energy crisis in Europe. The S&P 500 declined 16.07 points, or 0.4%, to 3908.19 after the long Labor Day weekend. The Dow Jones Industrial Average slid 173.14 points, or 0.6%, to 31145.30. The tech-focused Nasdaq Composite lost 85.96 points, or 0.7%, to 11544.91, down for seven straight trading days, the longest losing streak since November 2016.

Within the S&P 500, seven out of 11 sectors were in the red on Tuesday, with industrials, healthcare, real estate and utilities gaining. A stronger than expected ISM services index for August left investors nervous that the US Fed may keep raising rates to combat inflation and the figure spoken about is roughly 0.75%. The next meeting is earmarked to be in this month of September.

Treasury yields nudged higher as investors await the central bank’s next move. The benchmark 10-year note climbed to 3.338%, while the 2-year Treasury note rose to yield 3.499%, its highest level since 2007.

Many investors fear that continued aggressive interest-rate increases will push the U.S. economy into a protracted economic downturn and analysts have begun lowering their third-quarter earnings estimates.

“As pressure builds on companies and consumers and the downturn deepens, that’s going to weigh on stock prices,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “There’s still some way to go with falling stocks, just given how high prices climbed during the pandemic.”

The easing of prices in energy markets Tuesday was among the catalysts for European stocks’ rebound, Ms. Streeter said. Now, attention has turned to the European Central Bank’s interest-rate decision due on Thursday. In the U.K., many investors also are focused on the agenda ahead for Liz Truss, who won the race to lead the ruling Conservative Party and become Britain’s next prime minister.

In commodity markets, oil prices edged lower after a temporary rally on the heels of the first supply cut by OPEC+ in more than a year as the group works to manage global crude markets. West Texas Intermediate (WTI or USOIL) crude oil fell to $86.77 per barrel while Brent (UKOILF) futures ticked down to $92.65 per barrel.

Closer to home local shares today. The ASX 200 closed 750 points lower at -1.08% as it readjusts to the U.S. first trading day yesterday after their long weekend.

Sources: https://finance.yahoo.com/, https://stockhead.com.au/, https://www.wsj.com/.