In a day of fluctuating trading, US equity indexes experienced modest gains, though they retreated from session highs as market volatility began to reverse after midday on Wednesday. The Nasdaq Composite climbed slightly, registering an increment of less than 0.1%, concluding the session at 16,374.1 after reaching a peak 1.1% higher earlier in the trading activity.
Conversely, the S&P 500 experienced a marginal decline, closing at 5,234.71 after demonstrating a near 1% gain. Meanwhile, the Dow Jones Industrial Average, which had risen by as much as 0.6% at one point, ended the day down by 0.1%, settling at 38,947.5. Throughout the trading session, certain sectors faced declines, prominently health care, consumer discretionary, technology, and materials, while utilities and energy sectors emerged as major gainers, propelling the overall market upward. The CBOE’s Volatility Index (VIX), commonly referred to as the fear gauge, saw a trading decrease of 0.3%, landing at 27.66.
Earlier fluctuations in this indicator showed it swinging by as much as 12%, reflecting uncertain sentiment among market participants. Notably, the index had surged beyond the 50 threshold earlier in the week, primarily due to apprehension surrounding the US economy's potential sharp slowdown. Concerns regarding economic stability were initially heightened by a substantial miss in July’s non-farm payrolls.
However, these fears appeared to wane, indicated by the significant drop in the likelihood of a 50 basis point interest rate cut, decreasing to 64% by Wednesday afternoon, down sharply from over 90% on Monday. Most Treasury yields experienced intraday increases, with the 10-year yield rising by 6.8 basis points to 3.95%, while the two-year rate climbed 3.5 basis points to 4.02%. In noteworthy developments, Bank of Japan Deputy Governor Shinichi Uchida’s statements on Wednesday — affirming that the central bank would refrain from raising rates in light of financial market instability — contributed to a further decline in the yen and an uplift in overall market sentiment, according to reports from Reuters.
This came after the central bank's unforeseen rate hike on July 31, which had significantly influenced the global market crash on Monday, effectively initiating a broad unwinding of the yen carry trade. As for US economic data, mortgage applications soared by 6.9% in the week ending August 2, buoyed by a sharp decline in mortgage rates that spurred both refinancing and new home applications, based on Wednesday’s report from the Mortgage Bankers Association. Company-specific developments reflected mixed results.
Fortinet ($FTNT) announced Q2 adjusted earnings and sales that surpassed analysts’ expectations, consequently raising its guidance for the entire year of 2024. This announcement propelled its shares upwards, achieving a remarkable 27% gain intraday, marking it as the top performer on both the S&P 500 and Nasdaq indexes. In contrast, Super Micro Computer ($SMCI) saw its shares plummet by over 18%, making it the worst performer among the two indices following a fiscal Q4 adjusted profit that fell short of analysts' forecasts. Airbnb ($ABNB) faced setbacks as RBC Capital Markets described its Q2 earnings performance as ‘tough’.
Citing slower demand coupled with rising marketing expenses, the analyst noted the company’s situation resembled a textbook case of multiple compression resulting from increased marketing spend during a period of declining demand, leading to a drastic slump in shares by over 14%. On the commodities front, West Texas Intermediate crude oil experienced a notable increase of 2.6%, reaching $75.09 per barrel.
Additionally, gold recorded a rise of 0.3%, valued at $2,438.21 an ounce, while silver faced a slight decline of 0.7%, ending at $27.02. This diverse array of market movements illustrates the intricate dynamics at play within the current economic landscape, further affecting both investor sentiment and market behavior..