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Stock Market News for Aug 12, 2022

U.S. stocks ended mostly lower on Thursday although another batch of better-than-expected inflation data showed that soaring prices may be finally easing. However, investors felt that the Fed might still need to continue with its aggressive rate-hike policy to get a complete grip on surging inflation. The S&P 500 and the Nasdaq ended in negative territory, while the Dow closed in the green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) gained 0.1% or 27.16 points to end at 33,336.67 points.

The S&P 500 fell 0.1% or 2.97 points to finish at 4,207.27 points.

The Health Care Select Sector SPDR (XLV) lost 0.7%, while the Industrials Select Sector SPDR (XLI), declined 0.5%. The Energy Select Sector SPDR (XLE) advanced 3.4%. Six of the 11 sectors of the benchmark index ended in negative territory.

The tech-heavy Nasdaq declined 0.6% or 74.89 points to close at 12,779.91 points.

The fear-gauge CBOE Volatility Index (VIX) was up 2.33% to 20.20. Advancers outnumbered decliners on the NYSE by a 1.54-to-1 ratio. On Nasdaq, a 1.25-to-1 ratio favored advancing issues. A total of 12.36 billion shares were traded on Thursday, higher than the last 20-session average of 11.06 billion.

Investors Still Worried About Inflation

Thursday’s session started on an optimistic note as another round of better-than-expected inflation data gave a further boost to investors’ confidence, as the producer price index (PPI) for July surprisingly declined from June. The good news came just a day after the Labor Department said that July’s consumer price index remained unchanged after increasing 1.3% in June.

Thursday’s data suggested that the soaring price gains are finally easing. This gave investors the feeling that the Fed, which will take these data into consideration, will be less aggressive in hiking interest rates in its September meeting. This sent stocks on a rally.

However, markets couldn’t hold on to the momentum as investors are still worried as prices are still high. The recent decline in energy prices and commodities is one major reason that has slightly eased inflation but analysts believe that higher housing costs could pose a threat and could keep core inflation at a high. 

This once again gave them a feeling that the Fed could continue to aggressively hike interest rates in its next meeting to get a full grip on the already elevated inflation. The negative sentiment at the end of the day once again took a toll on stocks, with all the three major indexes paring almost all their day’s gains.

However, financial stocks benefitted from this. Shares of Bank of America Corporation BAC gained 2.4%, while The Goldman Sachs Group, Inc. GS rose 1.1%. Bank of America Has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here.

Earnings Season Coming to a Close

The earnings season is coming to a close with 91% of the S&P 500 companies having already reported their quarterly results. The earnings season so far has been impressive despite many companies having issued poor revenue guidance for the next quarter.

The Walt Disney Company DIS was the big gainer on Thursday after it posted stronger-than-expected growth in subscribers in the last quarter besides beating earnings and revenue expectations. The company reported third-quarter fiscal 2022 adjusted earnings of $1.09 per share, beating the Zacks Consensus Estimate of $0.94 per share. Shares of Walt Disney jumped 4.7%.

Economic Data

The Labor Department said on Thursday that the producer price index or PPI for July dropped 0.5% against expectations of a rise of 0.2%.

In other economic news, jobless claims totaled 262,000 for the week ending Aug 6, increasing 14,000 from the previous week’s revised level of 248,000. The four-week moving average also increased to 252,000, an increase of 4,500 from the previous week’s revised average of 247,500.

Continuing claims came in at 1,428,000, an increase of 8,000 from the previous week’s revised level. The previous week's numbers were revised up by 4,000 from 1,416,000 to 1,420,000. The 4-week moving average was 1,399,250, an increase of 23,750 from the previous week's revised average of 1,375,500.

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