August Slump Continues; Rough Week on Wall Street

Disappointing economic data out of China, bank sector woes, and hawkish Fed minutes are to blame

Deputy Editor
Aug 18, 2023 at 2:38 PM
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    August continues to be a rocky month on Wall Street. All three major indexes are headed for their third-straight weekly losses at this point on Friday, putting the S&P 500 (SPX) on track for its worst weekly losing streak since February, while the Nasdaq Composite is eyeing its (IXIC) worst since December. Plus, the Dow Jones Industrial Average (DJI) is headed for its worst week since March. 

    Several factors contributed to the market's sour trading. Disappointing economic data out of China weighed on sentiment early this week, while the bank sector slid following warnings of more credit downgrades from Fitch Ratings, which could include JP Morgan Chase (JPM). Federal Reserve meeting minutes for July hinted at more rate interest rate hikes, sending stocks lower on Wednesday, while Thursday's flood of economic data did little to boost morale. 

    Big-Time Earnings Reports

    Retail giant Target (TGT) reported mixed second-quarter results this week, with fewer discounts and better inventory helping profits. Meanwhile, Walmart (WMT) announced better-than-expected results and a strong forecast, though shares moved lower by the end of the day.

    Fellow Dow member Cisco Systems (CSCO) shared strong fiscal fourth-quarter results as well, sending the shares to 16-month highs, while T.J. Maxx and HomeGoods parent TJX Companies (TJX) jumped to record highs after earnings. Options traders also blasted Sea (SE) as the stock sank to three-year lows following a revenue miss. 

    Above the Fold

    Several news headlines sent stocks moving this week as well. United States Steel (X) soared after rejecting a buyout offer from Cleveland-Cliffs (CLF), while Warren Buffett's Berkshire Hathaway (BRK) set its sights on D.R. Horton (DHI). CVS Health (CVS) stock dropped to two-year lows after Blue Shield dropped the pharmacy services in favor of Mark Cuban's Cost Plus Drugs and Amazon (AMZN) Pharmacy. 

    What's Coming Next Week

    Next week will bring a handful of economic indicators and a flood of retail earnings. Though the SPX has recently pulled back, presenting a potentially intriguing entry point for the SPDR S&P 500 ETF Trust (SPY), investors should consider waiting according to Schaeffer's Senior Quantitative Analyst Rocky White. Schaeffer's Senior Vice President of Research Todd Salamone noted several layers of technical support in place for the SPX as well. 


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