Tech Stocks Decline – When the Key Figures Came

Tech Stocks Decline – When the Key Figures Came

Ahead of the stock market open, investor sentiment indicated that it would be a nervous day in the US stock market. And when the Nasdaq and New York Stock Exchange opened, the three indices fell by about 0.3 percent.

On Wednesday, investors waited for more news from this week’s economic calendar:

  • In the USA, services PMI numbers and ISM services sector numbers, both for August, were released.
  • The Fed’s “Beige Book” update came Wednesday night. The survey says something about the state of economic development in the 12 federal districts.

Headline numbers that came just after stock exchanges opened showed that the headline Purchasing Manager’s Index from S&P Global ended at 50.2 in August. The headline figure was expected to be 50.4, down from 52.0 in August. The Services PMI figures ended at 50.5 in August. This is also slightly lower than the expected 51.0.

But the US Purchasing Managers’ (ISM) expectations index for the services sector reached 54.5 in August, TDN Direkt wrote. This exceeded expectations and is not good news for those hoping the Fed is done raising interest rates, according to economists.

– The ISM service sector report confirms the resilience of the bulk of the economy, says Quincy Crosby chief strategist at LPL Financial, according to Bloomberg.

– Certainly not good news

ISM numbers above 50 indicate that the economy is on the way up, and the August numbers show much higher activity than expected. The news agency TDN Direkt refers to Trading Economics, which reported that the index is expected to close at 52.5.

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Crosby’s chief strategist points to reports on Wednesday, where bid prices appear to be on the way up, then comments:

This is certainly not good news for the Federal Reserve, which is now dependent on data.

The fact that the economy is still maintaining a high speed can be interpreted to mean that the Fed has fresh arguments to raise interest rates this fall, which in turn naturally means that indices fell further on Wednesday. When the exchanges closed, it looked like this:

  • The broad Standard & Poor’s 500 Index fell 0.7 percent on the day.
  • The Dow Jones Industrial Average ended the day down by 0.6 percent.
  • And on the Nasdaq Technologies stock exchange, there was a decline of one percent.

– Growth slowed

And while Wednesday’s headline numbers showed higher activity in the economy, the Fed’s “Beige Book” update showed that growth is slowing.

Growth in the US economy and labor market slowed in July and August, and many companies expect wage growth to slow in the near future, the Fed wrote, according to Bloomberg.

Furthermore, the Fed writes that connectivity with various regions indicates that economic growth has been modest.

– Most regions reported that price inflation has slowed, and that it fell further in industrial and consumer goods. However, many regions report a sharp increase in property insurance costs in recent months, the report states.

Prior to the update, Sarah Midtgaard, Chief Economist at Handelsbanken, mentioned that the previous report contained many funny things.

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– The latest report, dated June 30, showed that hotels in Philadelphia had the highest profits since before the pandemic, due, among other things, to Taylor Swift’s concerts. Barbenheimer’s, as well as concerts of Taylor Swift and Beyoncé, can get a temporary boost on certain types of services.

– And the response from other types of industries is that they expect a cooling down in the future. “We will also look for signs of further pressure on prices or wages,” Midtgaard wrote.

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Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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