After a disappointing performance for two consecutive trading weeks, the S&P 500 started this week on a stable note. It rose on Tuesday amid the improved market sentiment and increased risk appetite. However, it lost momentum on Wednesday and closed the day with a loss. Eight out of the S&P 500’s 11 major sectors closed negative on August 23, 2017.
The industrials and consumer discretionary sectors pushed the market lower, while strength in the real estate and energy sectors limited the S&P 500’s losses.
The market sentiment was weak on Wednesday amid a pullback in defensive stocks and weaker-than-expected economic data. According to data released by Markit, the US manufacturing PMI (purchasing managers’ index) fell to 52.5 in August from 53.3 in July. It was less than analysts’ forecast of 53.3. According to the US Department of Commerce, US new home sales fell 9.4% in July. The market was expecting growth of 0.3% in home sales in July. The defense stocks that rose on Tuesday after President Trump’s hawkish speech pulled back on Wednesday and weighed on the market. On August 22, President Trump outlined his plans to deal with conflict in Afghanistan and added that the US will dramatically change its approach.
The market is looking forward to the release of initial jobless claims and existing home sales data that are scheduled to release on August 24.
On August 23, the S&P 500 started the day lower and closed near the opening prices. The CBOE Volatility Index (or VIX) measures uncertainty in the market. On August 23, it rose 7.9% to 12.25. The VIX is measured on a scale of one to 100 with 20 as the historical average. The VIX is also called the “fear index.” It usually has an inverse relationship with stocks and rises when the S&P 500 falls.
NASDAQ and Dow
Similar to the S&P 500, the NASDAQ Composite Index and the Dow Jones Industrial Average also started the day lower and closed the day with losses. The NASDAQ Composite Index fell 0.3% and closed the day at 6,278.41. The Dow Jones Industrial Average fell 0.4% and closed at 21,812.09.
In the next part, we’ll discuss the S&P 500’s top gainers on August 23.