After a strong jobs report in August failed to allay concerns that the Federal Reserve would continue to rapidly raise interest rates to fight inflation, U.S. stocks fell to a plateau on Friday. their third straight weekly decline.
To end the week, all major averages were down. The Nasdaq lost 4.2%, the S&P lost 3.3% and the Dow Jones fell 3%.
After an early rise, the Dow Jones Industrial Average gave up a gain of 370 points and ended the session down 1.1%. About the same amount the Nasdaq Composite fell, the S&P 500 plunged.
Highlights for next week include a speech by Jerome Powell, ECB and RBA meetings, an OPEC+ rally, ISM services and a number of sell-side conferences.
On the macroeconomic front, credit rating agency Moody’s downgraded its 12-month price outlook for important mining commodities, blaming the global economic slowdown and falling demand, particularly from China and the United States. Europe where a recession is imminent. In a major research report released on Friday, Moody’s included important commodities such as copper, steel, aluminum, silver, gold and silver.
The biggest outflow from US stocks in ten weeks has been seen, according to Flow Stats. According to data from Lipper, the typical US mutual fund or exchange-traded fund has lost 17.3% of its value so far this year as of the end of August. This includes an average decline of 3.5% in August.
After August’s nonfarm payrolls report showed employment growth slightly above consensus, stocks initially rose. The pullback from the Fed’s pivot and the raise-and-hold rhetoric had put additional upward pressure on rates, and the report appeared to have satisfied the market’s need for relief.
However, the market then went on the defensive following news of an extended shutdown of the Nord Stream pipeline. Friday evening, the large Russian energy company Gazprom extended the suspension of gas deliveries to Germany while not proposing any timetable for recovery. The timing of the action may prompt speculation about whether Putin was reacting to Russia’s upcoming oil cap.
Despite an 8% weekly drop in the price of Brent last week, the S&P500 energy sector was the strongest. The market seems to be attracted by the record profits just revealed by the sector. Social media, hydrogen, electric vehicle chargers, online education and cannabis stocks were among the sectors’ poorest themes. On a more positive note, solar power is growing so rapidly that installations worldwide this year are on track to be about three times higher than the capacity regulators predicted will be installed in 2040 when they released forecast in 2017. The recently passed Inflation Reduction Act (IRA), which provides nearly $369 billion to support energy growth, is expected to be a game-changer for the solar industry. After the passage of the legislation, analysts modernized the sector. For example, First Solar stock rose 28.6% in August.
Summary of news:
- Despite the energy crisis, solar stocks are exploding
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