Monday, August 15, 2022
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Wall Street stocks edge lower after best month since 2020

US stocks tumbled lower after wrapping up their best month since 2020 last week.

The S&P 500 Composite jumped between gains and losses on Monday, closing 0.3% on the day, while the tech-heavy Nasdaq Composite lost 0.2%.

Stock market trading volumes are typically lower during the summer vacation period, which can lead to worse swings.

Monday’s decline followed a more than 9% rise in the S&P 500 in July and a 12.3% gain in the Nasdaq, which marked the strongest month for tech benchmarks since April 2020.

A closely watched set of indicators of the health of the global manufacturing sector clouded the economic outlook. The Institute for Supply Management’s U.S. Purchasing Managers Index fell to 52.8 in July, the lowest level in June 2020. Any number above 50 points to expansion, but the latest results point to slowing growth.

However, the ISM price index shows encouraging signs that cost pressures on businesses may be easing. The sub-index fell to an almost two-year low of 60 in July from 78.5 last month, well below economists’ expectations.

Meanwhile, in China, an official survey released over the weekend showed an unexpected contraction in factory activity last month after a resurgence of the coronavirus and stress in the domestic property market dampened demand. The manufacturing PMI was 49, down from 50.2 in June.

ING Greater China economist Iris Pang said in a note to clients: “Both domestic and external manufacturing demand were weak.

“Unfinished real estate projects may be at least part of the reason,” Pang said. Pang also noted the “risk of contagion from financially unsound property developers to downstream and upstream industries.”

Line chart of public purchasing managers' index showing China's factory sector back in contraction territory

Weak data weighed on oil prices, with Brent crude falling 3.8% to $100.03 a barrel.

The Europe region’s Stoxx 600 index closed 0.2% lower. An index of European bank stocks rose 0.9%, with quarterly results from lender HSBC beating analyst expectations.

In bond markets, the benchmark 10-year Treasury yield rose to 0.05 points as prices rose after government debt surged last week after data showed the U.S. economy contracted for two straight quarters. It dropped to 2.59%. ..

In recent weeks, investors have dwindled expectations about the extent to which the Federal Reserve will tighten monetary policy to curb rampant inflation. The futures market on Monday set the February 2023 benchmark rate at around 3.3%, down from a mid-June forecast of 3.9%. The US Central Bank’s current target range is 2.25-2.5%. Last week was the second time in months that he raised borrowing costs by 0.75 percentage points.

Antonio Caballero, head of investment at Generali Insurance Asset Management, said the market “looks beyond the well-known inflation problem and what we see as an economic slowdown that will force central banks to ease again.” Stated.

Elsewhere, Italian bonds rallied after weeks of intense pressure. The yield on his 10-year bond in Rome dropped him 0.15 points, dropping him below 3% for the first time since May.

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