US close: Stocks rise ahead of busy few days for data

By Sharecast News

Sharecast News | 29 Aug, 2023

Wall Street closed with some decent gains on Tuesday, with investors looking ahead to a slew of US economic data scheduled to be released later this week.

At the close, the Dow Jones Industrial Average was up 0.85% at 34,852.67, while the S&P 500 index rose 1.45%, ending the trading day at 4,497.63.

The Nasdaq Composite, buoyed largely by tech stocks, showed the strongest performance among the three major indices, gaining 1.74% to close at 13,943.76.

On the currency front, the dollar was last down 0.03% on sterling at 79.07p, while it slipped just 0.01% against the common currency to trade at 91.9 euro cents.

The greenback also recorded a minor decrease of 0.02% against the yen, to last change hands at JPY 145.85.

“With last week's Jackson Hole symposium out of the way and it not giving many clues as to the future direction of monetary policy, traders are looking at this week's inflation, growth and employment data for guidance,” said IG senior market analyst Axel Rudolph.

“On Wednesday Germany will publish its inflation data for August, followed by the second estimate of US second-quarter GDP and EIA crude oil inventories.

“On Thursday a plethora of retail sales, industrial production and inflation data should keep investors busy ahead of Friday's eagerly awaited US non-farm payrolls.”

US job openings drop, house prices rise, consumer confidence falls

On the economic front, the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics suggested that job openings experienced a downturn in July, dropping to 8.827 million from 9.165 million in June.

The figure was the lowest since March 2021, and notably less than the 9.465 million predicted by economists.

Moreover, the number of new hires dipped to 5.773 million from 5.94 million, and layoffs increased marginally to 1.555 million from 1.551 million.

Meanwhile, the number of quits - a parameter some economists view as an indicator of worker confidence in finding better employment opportunities - also saw a reduction, declining to 3.549 million from 3.802 million.

On the housing front, the latest S&P/Case-Shiller national home price index revealed that house prices in the US continued their upward trajectory in June.

The 20-city house price index increased by 0.9% for the month, although it showed a year-on-year decline of 1.2%.

Additionally, the seasonally-adjusted US National Index observed a month-over-month rise of 0.7%.

“June is the fifth consecutive month in which home prices have increased across the US,” said Craig Lazzara, managing director at S&P DJI.

“With 2023 half over, the National Composite has risen 4.7%, which is slightly above the median full calendar year increase in more than 35 years of data.

“We recognise that the market's gains could be truncated by increases in mortgage rates or by general economic weakness, but the breadth and strength of this month's report are consistent with an optimistic view of future results.”

Consumer confidence, however, took an unexpected hit in August, as the Conference Board's monthly consumer confidence index dropped to 106.1, down from a revised 114 in July, defying expectations for a reading of 116.

The present situation index, which assesses the public's view on current business and labour market conditions, fell from 153 to 144.8.

Meanwhile, the expectations index, which measures future outlook, plummeted from 88 to 80.2.

The Conference Board warned that an expectations Index reading around 80 often presages a recession within the upcoming year.

“Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular,” said Dana Peterson, chief economist at the Conference Board.

Analyst recommendations and earnings updates propel stocks

In equities, Verizon Communications led the telecom sector with a 3.4% increase after favourable commentary from analysts at Morgan Stanley.

The financial services firm suggested that Verizon could raise its dividend in September, a move that would set it apart from sector peers.

That came in contrast to AT&T, which reduced its dividend, and Lumen, which eliminated its dividend payout entirely last year.

In the tech sector, Oracle Corporation's stock rose by 3.26%, spurred by an upgrade from UBS.

The brokerage firm shifted its stance on Oracle from 'neutral' to 'buy', boosting investor confidence and catalysing the stock’s upward movement.

Electronics retailer Best Buy Co saw its stock rise by 3.86% despite delivering a mixed second-quarter earnings report.

While the company surpassed both sales and profit expectations for the quarter, it revised its full-year outlook downward.

Still, the stock moved higher as investors seemed to focus more on the immediate positives - Best Buy noted that 2023 was likely to be "the low point in tech demand".

Snack food firm the JM Smucker Company also enjoyed a favourable day, with its stock rising by 2.13%.

The gain came after the company lifted its profit forecasts for the year, following a strong performance in its first quarter.

Reporting by Josh White for Sharecast.com.

Dow Jones - Risers

Verizon Communications Inc. (VZ) $34.69 3.40%
Apple Inc. (AAPL) $184.12 2.18%
Nike Inc. (NKE) $101.77 2.15%
Intel Corp. (INTC) $34.31 2.05%
Goldman Sachs Group Inc. (GS) $332.55 2.02%
Caterpillar Inc. (CAT) $280.03 1.91%
Walgreens Boots Alliance, Inc. (WBA) $25.54 1.47%
Microsoft Corp. (MSFT) $328.41 1.46%
3M Co. (MMM) $105.57 1.39%
Amgen Inc. (AMGN) $259.64 1.20%