Stock Market News for Sep 9, 2021

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U.S. stock markets closed lower on Wednesday as investors remained concerned about the potential slowdown in economic recovery. Investors’ sentiment also took a hit as the U.S. Federal Reserve stated in its Beige Book that the pace of economic growth had moderated. The Treasury Secretary also urged Congress to raise or suspend debt limit for preventing a default. All the three major stock indexes closed the day in red.

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How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.2%, closing at 35,031.07, continuing its losses from the previous two sessions. Notably, 16 components of the 30-stock index ended in red while 14 finished the day in green.

The tech-heavy Nasdaq Composite closed the day at 15,286.04, down 0.6%, snapping its gains from previous sessions, on the back of weak performance by large-cap technology stocks. The S&P 500 fell 0.1%, closing the day at 4,514.07, maintaining its three-day losing streak. The Energy Select Sector SPDR (XLE) and the Materials Select Sector SPDR (XLB) fell 1.3% and nearly 1%, respectively. Six out of eleven sectors of the benchmark index closed in the negative zone and five closed in the green.

The fear-gauge CBOE Volatility Index (VIX) was down nearly 1% to 17.96. A total of 9.5 billion shares were traded on Wednesday, higher than the last 20-session average of 9.1 billion. Decliners outnumbered advancers on the NYSE by a 1.71-to-1 ratio. On Nasdaq, a 2.18-to-1 ratio favored declining issues.

Concerns about Economic Recovery Moved Wall Street Lower

U.S. stock markets moved lower in Wednesday’s session as investors remained concerned about the potential slowdown in economic recovery, owing to the Delta variant of COVID-19. Moreover, uncertainties persist with regard to the timeline as to when the U.S. Federal Reserve would start easing on the monetary stimulus that it has provided so far to support the economy during the pandemic.

The materials sector moved lower on Wednesday as the sector is sensitive to economy recovery. Materials stocks like Freeport-McMoRan Inc. FCX, Dow Inc. DOW and Newmont Corporation NEM dipped 5.5%, 1.9% and 0.3%, respectively. Dow carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Treasury Secretary Urged Congress to Raise or Suspend Debt Limit

Treasury Secretary Janet Yellen stated that the Treasury Department would exhaust at some point of time in October, its extended efforts to timely pay the federal government’s bills and urged Congress to raise or suspend the debt limit for preventing a default. Yellen stated in a letter to House Speaker Nancy Pelosi that a delay could cause “irreparable damage to the U.S. economy and global financial markets.”

Economic Data

Investors’ sentiment was also dampened in Wednesday’s session as the U.S. Federal Reserve published its Beige Book late in the day wherein it was stated that from early July through August, economic growth in the United States “downshifted slightly to a moderate pace.” The deceleration was witnessed primarily due to a pullback in dining out, travel and tourism in many districts, due to concerns arising out of the Delta variant of COVID-19, along with international travel restrictions at some places. Other sectors also witnessed slowing of growth due to supply constraints and shortage of labor.

The report further stated that all districts reported overall rise in employment with the pace of job creation ranging from slight to strong. Although demand for workers continued strengthening, labor shortages were noted by all districts. Half of the districts also noted that price increases was strong while the other half noted it to be moderate.

The U.S. Federal Reserve reported separately that in July, consumer credit increased $17 billion to $4,331.1 billion, falling short of the consensus estimate of increase of $26 billion, and compared to an increase of $37.9 billion in June which was revised upward from $37.6 billion rise reported earlier.

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