S&P 500, Nasdaq Show Weakness Ahead Of FOMC Minutes, Tesla Sinks To 2-Month Low: What's Driving Markets Wednesday?

Despite a positive start, major indices are mired in red around midday in New York, reflecting persistent risk aversion.

Investors remain cautious, awaiting clarity on interest rate prospects from the impending release of Federal Open Market Committee (FOMC) minutes from the July 25-26 meeting at 2 p.m. ET.

Tech stocks, led by the Nasdaq 100 Index, which is tracked by the Invesco QQQ Trust QQQ, continue to lag, hitting a low for the month. The S&P 500 index slipped below its 50-day moving average this week, indicating an ongoing short-term bearish trend. Tesla Inc. TSLA remains one of the weakest links among mega-cap stocks, falling for the fourth straight session and hitting the lowest level in more than two months.

Cues From Wednesday's Trading:

The S&P 500 slipped 0.2%, and is on track for the third straight week of losses. The Dow Jones Industrial Average eased 0.1%, falling below the 35,000 psychological mark.

The Nasdaq 100 fell 0.6%, also breaking below 15,000. Small caps in the Russell 2000 also tumbled 0.6%, on track for the tenth negative session this month.

US Index Performance On Wednesday

In the week ending on Aug. 11, 2023, mortgage applications in the United States registered a 0.8% decline, marking the fourth consecutive week of decreases. The average interest rate for 30-year fixed-rate mortgages, pertaining to conforming loan balances ($726,200 or less) , rose by 7 basis points to reach 7.16%, the highest since October 2022.

In July 2023, housing starts experienced a 3.9% increase on a month-over-month basis, reaching a seasonally adjusted annualized rate of 1.45 million, slightly above the expected 1.44 million.

In July 2023, US industrial production surged by 1%, the largest in six months, surpassing market expectations of a 0.3% increase. Manufacturing output also outperformed predictions, rising by 0.5%, driven by a 5.2% jump in motor vehicle and parts production.

In the week ending Aug. 11, U.S. crude oil inventories declined by 5.96 million barrels, surprising market forecasts of a 2.32 million barrel reduction.

The Fed is scheduled to release the minutes of the July meeting at 2 p.m. EDT.

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Stocks In Focus:

• The Progressive Corp. PGR rose 8.5% after the company reported an increase in net premiums written to 21% to $5.95 billion in July.
• Jack Henry & Associates Inc. JKHY fell 8%, the most among S&P 500’s stocks, despite beating both earnings and revenue expectations last quarter, as the company released weak guidance.
• Advanced Micro Devices Inc. AMD fell over 3% amid a weaker session for semiconductor stocks.
• H&R Block, Inc. HRB rose over 5% following the release of its quarterly results.
• Agilent Technologies, Inc. A retreated over 3% in reaction to its earnings report.
• Target Corp. TGT rose 3.7% despite the company reporting a sales miss and reducing its full-year forecasts.
• JD.com, Inc. JD fell 2% despite reporting better-than-expected earnings, hit by a broader selloff in Chinese equities.

Notable companies reporting after the close include Cisco Systems, Inc. CSCO, Avnet, Inc. AVT and Wolfspeed, Inc. WOLF.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 1%, with a barrel of WTI-grade crude trading at $79. The United States Oil Fund ETF USO was 0.7% lower to $68.70.  

Treasury yields were broadly steady, with the 10-year yield up by 2 basis points to 4.24% and the two-year yield flat at 4.95%. The iShares 20+ Year Treasury Bond ETF TLT was 0.3% lower for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.1%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.1% lower to 1.0890.

European equity indexes had mixed performances. The SPDR DJ Euro STOXX 50 Etf  FEZ eased 0.1%. 

Gold fell 0.1% to $1,899/oz. The SPDR Gold Trust GLD was 0.2% lower to $176. Silver fell 0.1% to $22.5, with the iShares Silver Trust SLV down 0.2% to $20.6. Bitcoin BTC/USD was 0.5% lower to $29,032.

Staff writer Piero Cingari updated this report midday Wednesday

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