US benchmark equity indexes faced a downward trend during intraday trading as investors absorbed the latest economic data. The Dow Jones Industrial Average experienced a decline of 0.6%, settling at 41,939.5 by midday Wednesday, while the S&P 500 dipped marginally by 0.2%, reaching 5,720.9. The Nasdaq Composite index showed minimal movement, holding steady at 18,074.9.
Notably, the energy sector registered the most significant drop among sectors, whereas utilities emerged as the day's gainers. Recent economic developments indicate a decline in new-home sales across the US in August, with median prices at the national level showing a sequential decrease, as reported by government data.
Oxford Economics has commented that lower mortgage rates coupled with an increased supply of new homes relative to existing ones should foster modest growth in new home sales throughout the remainder of 2024 and into 2025. In the mortgage market, weekly applications surged to their highest level since July 2022, reflecting a robust wave of refinance activity, with the Mortgage Bankers Association noting that the 30-year fixed rate for conforming loan balances fell for the eighth consecutive week. Meanwhile, the yield on the US 10-year Treasury rose by 4.5 basis points, standing at 3.78% during intraday trading, while the two-year yield saw a gain of 2.9 basis points, reaching 3.55%.
Last week, the Federal Reserve opted to lower interest rates by 50 basis points, contrasting with a Bloomberg-compiled consensus that predicted a more modest cut of 25 basis points. Market sentiments appear mixed as participants seem increasingly divided on the scale of the Fed's forthcoming policy adjustments.
Stifel’s Wednesday note to clients noted that while the latest consumer confidence data has heightened expectations for a second-round (50-basis-point) cut in November, concerns regarding a potential resurgence in inflation pressure, along with risks of an upside in the upcoming personal consumption expenditure report, have led some to anticipate a smaller quarter-point reduction, or even a pause in rate changes altogether. On Tuesday, the Conference Board reported a notable decline in consumer confidence within the US, marking the sharpest drop in nearly three years, while the annual inflation outlook showed slight increases.
In commodity markets, West Texas Intermediate crude oil prices fell by 2.7%, trading at $69.58 a barrel during Wednesday's session. In corporate news, General Motors ($GM) saw its stock drop by 5.4%, while Ford Motor ($F) experienced a 4.1% decline, making them some of the least performing stocks on the S&P 500 following recent downgrades by Morgan Stanley.
Amgen ($AMGN) faced a significant downturn, marking the steepest decline on both the Dow and Nasdaq, dropping 4.9% and ranking as one of the worst performers on the S&P 500. Furthermore, several companies, including Micron Technology ($MU), Jefferies Financial Group ($JEF), H.B. Fuller ($FUL), and Concentrix ($CNXC), are poised to release their latest quarterly financial results post the closing bell on Wednesday. In precious metals, gold prices edged upwards by 0.3%, reaching $2,683.40 per troy ounce, whereas silver recorded a slight decrease of 1.1%, settling at $32.07 per ounce..