U.S. stocks ended lower on Monday, failing to hold on to last week’s rebound rally as Wall Street gears up to wrap up its worst first half for stocks in years. The decline came despite some strong economic data as investors continued to remain concerned about slowing economic growth due to the aggressive hate-hike policy adopted by the fed to check inflation. All the major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 0.2% or 62.42 points to end at 31,438.26 points.
The S&P 500 fell 0.3% or 11.63 points to finish at 3,900.11 points. Consumer discretionary and materials stocks were the worst performers.
The Consumer Discretionary Select Sector SPDR (XLY) lost 1.1%, while the Materials Select Sector SPDR (XLB) declined 0.8%. However, the energy sector rallied. The Energy Select Sector SPDR (XLE) added 2.9%. Eight of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq slid 0.7% or 83.07 points to close at 11,524.55 points. All the three major indexes recorded their worst single-day percentage losses since Jun 16.
The fear-gauge CBOE Volatility Index (VIX) was up 1.03% to 26.95. Advancers outnumbered decliners on the NYSE by a 1.17-to-1 ratio. On Nasdaq, a 1.02-to-1 ratio favored declining issues. A total of 10.91 billion shares were traded on Monday, lower than the last 20-session average of 12.95 billion.
Inflation, Recession Fears Grip Investors
Markets closed on a high last week after all their three major indexes snapped their three-week losing streak. The momentum continued in the early trading hours on Monday after impressive economic data showed that both durable goods orders and pending home sales increased in May.
This sent stocks on a rally. However, things changed later as fears of recession and inflation once again unsettled them. Investors have been weighing over the past few days whether stocks have hit rock bottom or if the rebound that took place last week is merely a brief affair.
Last week’s rally has been credited to expectations that the Fed might go slow on its aggressive rate-hike policy than expected earlier on fears of a slowing economy. Growing concerns of a slowing economy that could lead to recession, have been impacting markets. Monday’s early morning rally came to a halt on these fears.
Consumer discretionary and tech stocks once again took a hit on Monday. Shares of Electronic Arts Inc.
EA
declined 3.5%. Electronic Arts holds a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Besides, tech stocks like Microsoft Corporation
MSFT
fell 1.1%, while Amazon.com, Inc.
AMZN
declined 2.8%.
Economic Data
The Census Bureau said on Monday that durable goods orders in the United States increased 0.7% or by $1.19 billion on a month-over-month basis to $267.2 billion in May. Analysts had expected the data to remain unchanged. New orders, excluding transportation, increased 0.7%.
In other economic data, the National Association of Realtors said that pending home sales unexpectedly increased 0.7% in May, breaking a six-month steak of decline.
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