Decline in the stock market following a drop in productivity; Energy stocks win
The stock market fell on Tuesday after labor productivity fell amid growing belief that we have entered a recession. Energy stocks surged after Russia cut off crude oil supplies to parts of Europe.
The Nasdaq composite fell 1.3% while the S&P 500 fell 0.4%. The Dow Jones Industrial Average fell 0.1%. The Russell 2000 Small Cap Index lost 1.6%.
Volume rose on the Nasdaq but fell on the NYSE from the same time on Monday.
U.S. labor productivity fell for the second straight quarter as employers spent more on wages and benefits. U.S. nonfarm labor productivity — a measure of goods and services produced in the United States per hour worked — fell in the second quarter at a seasonally-adjusted annual rate of 4.6%, according to the Labor Department. .
Economists polled by Econoday had estimated a drop of 4.5%. Unit labor costs, a measure of worker compensation and productivity, rose at a pace of 10.8% from the previous quarter. Economists had expected a 9.3% rise.
Overview of the US stock market today
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Last Updated: 12:06 PM ET 08/09/2022
IBD 50 leader jumps on profits
Despite recent job gains, a solid majority of Americans – 62% – think the US economy has entered a recession, up from 58% a month ago, according to a new IBD/TIPP poll.
The 10-year US Treasury yield fell five basis points to 2.78%. Crude oil prices fell to $90.66 a barrel.
Energy stocks posted the biggest gains on Tuesday after Russian oil stopped flowing through a pipeline that supplies central and eastern Europe. The S&P Energy Select Sector ETF (XLE) gained 2.1%.
medical shock wave (SWAV) climbed more than 16% after reporting earnings and sales that easily topped Wall Street estimates. This IBD 50 Stocks to Watch pick broke above the buy point of 223.25 from a cut basis with a rising relative strength line. The stock is trading well above its 50-day moving average and its 200-day moving average.
The Innovator IBD 50 (FFTY) ETF lost 1.4%.
Chipmakers are behind the stock market losses
Chipmakers are having a rough day.
Contract chipmaker GlobalFoundries (GFS) beat Wall Street’s second-quarter targets and trended higher for the current period. Even so, the stock fell 6%.
Micron (MU) plunged 5% after warning that fiscal fourth-quarter revenue may fall short of forecast lows.
In other sectors, Novavax (NVAX) fell nearly 30% after reporting a weak outlook for 2022 on sluggish demand for their recently approved Covid-19 vaccine.
The move follows a major disappointment in the second quarter, in which sales were less than a fifth of analysts’ expectations. Additionally, the company reported an unexpected loss that widened from the same quarter last year.
Main financial group (PFG) jumped more than 6% after easily beating earnings estimates. Stocks are building a base with a buy point of 77.32. Tuesday’s jump is on pace with the largest percentage increase since November 9, 2020, when it rose 15.16%.
Still to come this week on the earnings calendar: waltz disney (DIS) and You’re here (TSLA)rival Rivian Automotive (RIVN).
Follow Michael Molinski on Twitter @IMmolinski
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