Dow Stumbles After Sprinting Out of the Blocks
Stocks were on pace for a broadly positive session Monday, but they ended up turning in a mixed performance by the close as investors chewed on a number of headlines.
Over the weekend, the Senate unveiled the full text of a roughly $1 trillion bipartisan infrastructure bill, helping provide a lift in today’s early trade, including for a number of infrastructure-related picks.
But things turned after the open amid a few economic data releases. While a US Markit purchasing manager’s index reading for July showed that manufacturing activity grew at its fastest pace in 14 years, another gauge, from the Institute for Supply Management, showed growth in American manufacturing cooling off a little last month.
Also, construction spending improved in June, but only by 0.1% month-over-month, less than economists expected.
“That said, there were upward revisions to the data starting with April, leaving the average level of spending in Q2 broadly in line with expectations,” says Barclays economist Pooja Sriram. “The rebound in June came from the residential sector as expected, which rose 1.1% m/m.”
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The Nasdaq Composite managed to finish with an a marginal gain to 14,681 thanks to a strong move by Tesla ((TSLA), +3.3%), as well as semiconductor stocks such as Advanced Micro Devices (AMD, +2.3%) and Nvidia ((NVDA), +1.3%). But the Dow Jones Industrial Average finished with a 0.3% dip to 34,838, and the S&P 500 declined 0.2% to 4,387.
Other news in the stock market today:
- The small-cap Russell 2000 fell 0.5% to 2,215.
- Square (SQ) stock had quite the day. The company unexpectedly unveiled its second-quarter earnings report – which showed the fintech firm took in better-than-expected adjusted earnings of 66 cents per share on lower-than-anticipated revenues of $4.7 billion – ahead of schedule, reporting Sunday rather than the scheduled Wednesday release. Square also said it is buying Australian “buy now, pay later” company Afterpay (AFTPY, +35.2%) for $29 billion in stock. SQ stock ended the day up 10.2%.
- Electric vehicle (EV) stocks got a lift after several Chinese firms reported impressive July delivery numbers. Specifically, Li Auto (LI, +0.9%) and Nio (NIO, +2.6%) delivered 8,589 and 7,931 vehicles, respectively, last month – both figures up 125% year-over-year. Meanwhile, XPeng (XPEV, +7.1%) delivered 8,040 vehicles over the same time frame, a 228% improvement from the year-ago period.
- U.S. crude oil futures plunged 3.6% to end at $71.26 per barrel.
- Gold futures rose 0.3% to settle at $1,822.20 an ounce.
- The CBOE Volatility Index (VIX) jumped 6.7% to 19.46.
- Bitcoin declined 1.4% over the weekend to $39,172.80. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
It’s Not Time to Get Complacent
Welcome to August … a not terribly pleasant month for equity investors. Says Ryan Detrick, chief market strategist for LPL Financial:
“The good news is stocks are still firmly in a bull market, but the bad news is the calendar is a potential worry now. August and September have been historically two of the weakest months of the year. In fact, during a post-election year, August has been historically quite poor, with only February worse on average.
“Turning to September, it has indeed been historically the worst month of the year on average. Don’t forget that last year stocks saw nearly a 10% correction during this troublesome month.”
But rather than bracing for impact, Detrick appears cheerful.
“With the economy rebounding and earnings soaring,” he says, “should we see any seasonal weakness, we’d use that as an opportunity to add to core equity positions.”
Any dip would naturally make any value stock look even more economically priced – thus, it’s a perfect chance to swoop in on these 16 value-minded picks, or these 11 growth-at-a-reasonable-price (GARP) stocks. Or, you could use a downturn to get stock pickers’ favorites at more attractive levels. If you’re not the type to sweat the coming robopocalypse, these 10 artificial-intelligence-generated picks could follow in the tracks of their successful predecessors.
But if you prefer a human hand at the helm, consider tapping the wisdom of the crowd. These 25 blue-chip stocks are the preferred holdings of a number of billionaires and other high-net-worth investors, including Ray Dalio, Chris Hohn and, of course, Warren Buffett. Check them out.