Wall Street Close: S&P 500 snapped a three-day winning streak, falling 0.46%
- The Dow Jones Industrial Average DJI rose 38.17 points, or 0.14%.
- The S&P 500 SPX lost 15.62 points, or 0.46%.
- The NasdaqComposite IXIC dropped 139.86 points, or 1.25%.
It was looking all rosy on Wall Street until the Federal Reserve Chair, Jerome Powell commented in his Q&A session that “it will take a while to get back to levels of activity and employment that prevailed before the pandemic.”
Consequently, the benchmarks buckle under the pessimism and the bellwether S&P 500 snapped a three-day winning streak, falling 0.46% by the closing bell.
Overall, the Dow Jones Industrial Average rose 38.17 points or 0.14%, to 28,033.77. Economically sensitive industrial and financial stocks helped keep the Dow afloat. The blue-chip index ended the session up 0.13%.
The S&P 500 lost 15.62 points, or 0.46%, to 3,385.58 and the NasdaqComposite fell 139.86 points, or 1.25%, to 11,050.47.
The tech-heavy Nasdaq suffered the biggest loss among the major indexes, dipping1.25%, with market leaders Apple Inc AAPL, Amazon.com AMZN, Microsoft Corp MSFT and Facebook Inc FB weighing the most.
Fed delivers a balanced overview
As expected, the central bank left the key Fed funds target rate near zero and signalled that it expects to keep it there until 2023.
The statement repeated the Fed’s vow to use “its full range of tools” to support economic recovery, which should buoy the stock market for the forcible future so long as the economic recovery remains on track and vaccine hopes linger on.
However, Powell suggested that the fed’s action may to be enough and he that direct fiscal support may be needed.
Disappointing retail sales data released before the bell, which suggested the economic rebound from the pandemic recession could be losing momentum was a hindrance as well.
August US Retail Sales disappointed, rising 0.6% m/m (1% expected), with a material downward revision to the previous month.
The control group (which feeds into GDP) fell 0.1% MoM, adding to concerns that the economy may be losing momentum into Q4.
It suggests consumption has been affected by the end of the supplementary $600 weekly unemployment support and the rise in COVID-19 cases.
On the whole, the data argue for additional fiscal support and significant risks to the recovery as H2 advances, especially given that employment has been slowing.
analysts at ANZ bank explained.