On Wednesday, the Dow Jones Industrial Average and the S&P 500 retreated from their record-setting closing levels observed the prior day as traders carefully assessed recent economic indicators. The Dow experienced a decline of 0.7%, finishing at 41,914.8, while the S&P 500 dropped by 0.2% to 5,722.3.
The Nasdaq Composite remained relatively stable, closing at 18,082.2. Among the various sectors, energy witnessed the most significant downturn, whereas consumer staples and communication services displayed negligible changes. Notably, utilities and technology stocks managed to finish higher. In economic developments, data released revealed a decrease in new-home sales within the United States for August, coinciding with a sequential decline in median prices at the national level.
Analysts from Oxford Economics commented, "Lower mortgage rates and more plentiful supply relative to existing homes should support modest growth in new home sales over the rest of 2024 and in 2025." Furthermore, weekly mortgage applications in the US surged to their highest level since July 2022, driven by a spike in refinancing activity as the 30-year fixed rate for conforming loans dropped for the eighth consecutive week, according to the Mortgage Bankers Association. The US 10-year yield increased by 5.6 basis points, reaching 3.79% on Wednesday, while the two-year rate rose by 4.3 basis points to 3.56%.
Recently, the Federal Reserve enacted a rate cut of 50 basis points, contrary to the consensus forecast of a 25-basis-point reduction compiled by Bloomberg. On Tuesday, the Conference Board reported that US consumer confidence had plummeted in September at the steepest rate witnessed in nearly three years, whilst the annual inflation expectations edged upwards. Stifel indicated in a note to clients that market participants appear to be increasingly split regarding the magnitude of the Fed's next policy move.
"While the latest consumer confidence data has heightened expectations for a second-round 50-basis-point cut in November, the rise in inflation expectations, along with potential risks from the forthcoming personal consumption expenditure report, has led others to wager on a smaller quarter-point reduction or even a potential pause in adjustments." In commodity markets, West Texas Intermediate crude oil price fell by 2.4% to settle at $69.83 a barrel.
Additionally, commercial crude stockpiles in the US experienced a reduction of 4.5 million barrels, totaling 413 million barrels for the week ending Friday, as reported by the Energy Information Administration. Analysts had anticipated a decline of only 1.4 million barrels, as derived from a Bloomberg poll. In corporate news, shares of General Motors ($GM) dropped by 4.9%, and Ford Motor ($F) saw a decrease of 4.1%, both standing as among the largest decliners on the S&P 500, following downgrades issued by Morgan Stanley.
Amgen ($AMGN) faced the sharpest decline on both the Dow and Nasdaq, ranking as the second-worst performer on the S&P 500, down 5.5%. Meanwhile, Southwest Airlines ($LUV) is reportedly planning to cut its weekly flights out of Atlanta from 567 to 381, which contributed to a 4.6% drop in the airline's shares, marking one of the steepest declines on the S&P 500.
In a separate development, Southwest Airlines disclosed late Tuesday that activist investor Elliott Investment Management had declined to engage in discussions despite the company's attempts to find a constructive resolution. Elliott had previously issued an open letter to Southwest shareholders, suggesting a potential special meeting to address the airline's leadership and board structure as early as next week. Hewlett Packard Enterprise ($HPE) emerged as the second-best performer on the S&P 500, climbing by 5.1% after Barclays upgraded its rating from equal-weight to overweight and adjusted the price target from $20 to $24. In the commodities sector, gold prices rose by 0.2%, reaching $2,682.90 per troy ounce, whereas silver prices fell by 0.9%, settling at $32.13 per ounce..