In a day characterized by volatility, US equity indexes displayed mixed trading patterns as the majority of government bond yields increased in a turbulent midday session. This trading activity followed a surprising surge in orders for new durable goods, which jumped by an impressive 9.9% in July, a figure that nearly doubled market expectations. The S&P 500 index witnessed a decline of 0.4%, landing at 5,610.1, while the Nasdaq Composite saw a more pronounced drop of 1%, settling at 17,693.2.
Conversely, the Dow Jones Industrial Average managed a minimal uptick of less than 0.1%, reaching 41,198.6. The technology sector and consumer discretionary stocks were among the hardest-hit, while the consumer staples and utilities sectors emerged with notable gains. This divergence indicates shifting investor sentiment and sector rotation in response to economic signals. On the economic front, the jump in durable goods orders is particularly noteworthy, showing a robust 9.9% increase in July after a substantial 6.9% decline in June.
This performance surpassed initial estimates compiled by Bloomberg, which anticipated a more modest 5% rise. Such strong numbers could provide positive momentum for the broader economic landscape. Further insights came from the Dallas Fed's latest manufacturing index, which improved significantly, rising to minus 9.7 in August from a more negative minus 17.5 in July.
Market expectations for this index had projected an improvement to minus 16, reflecting a better-than-expected outlook. Meanwhile, the CBOE Volatility Index (VIX)—often referred to as the fear gauge—saw a 4.7% increase, trading at 16.61. This uptick suggests heightened market anxiety and could be attributed to the ongoing fluctuations in equity prices amid rising bond yields. In terms of Treasury yields, there was an observable rise during the choppy intraday trading session.
The yield on the 10-year note inched up less than one basis point to 3.81%, after experiencing lower trading levels earlier in the session. Similarly, the two-year yield rose to 3.93%, reflecting an increase of one basis point. Crude oil prices also demonstrated upward movement, with West Texas Intermediate crude surging by 3.2%, reaching $77.19 per barrel.
This spike in oil prices may stem from geopolitical factors impacting supply chains as well as fluctuating demand forecasts. In company-specific news, PDD Holdings experienced its Q2 revenue growth year over year, yet it fell short of market estimates. The prominent Chinese e-commerce platform has signaled that increased competition and various external challenges could hinder its future performance.
As a result, shares of PDD Holdings plummeted by 30%, marking it the worst performer on the Nasdaq for the day. Investors will be closely monitoring these developments to assess the broader economic implications and the shifting dynamics within individual sectors as they adjust to these market pressures..