U.S. stocks fell on Monday in a choppy start to August trading as Wall Street struggled to maintain July’s momentum.
The S&P 500 and the Dow Jones Industrial Average each fell about 0.3%, while the Nasdaq Composite held close to breakeven.
Investors looked at a series of data earlier in the session that showed manufacturing activity expanded at the slowest pace in more than two years. The Institute for Supply Management’s gauge of factory activity fell to 52.8 from 53 a month earlier, marking the lowest level since June 2020.
Meanwhile, separate data from S&P Global showed that the build-up of finished goods inventories fell for the first time since October 2020.
Monday’s moves come after stocks capped a month of strong gains on Friday. The benchmark S&P 500 rallied 9.1% in July, struggling from its worst start to a year since 1962. The Nasdaq Composite soared 12.3% for one of its best months on record , and the Dow Jones Industrial Average rose 6.7% for the month.
DataTrek’s Nicholas Colas notes that in recent weeks, stocks have reflected typical “risk-on” behavior, with small-cap stocks outperforming large-caps and the Nasdaq Composite outperforming the S&P 500. produce amid expectations that the latest signs of a The slowing economy may cause the Federal Reserve to scale back its interest rate hike cycle in the fall.
“Summer is a great time to go camping, but we’re not out of the woods yet,” Bank of America analysts said in a note on Sunday morning, warning of more pain for stocks.
During the last five recessions, the S&P 500 bottomed out only after the index’s earnings estimates were revised downward, with the exception of 1990, when forward EPS was flat, but cuts from estimates are just getting started, BofA noted.
“Our bull market indicators also indicate that it is premature to mark a bottom,” the analysts said, adding that historic market bottoms occur when 80% of bottom indicator indicators are triggered, compared with only 30% currently and also that bear markets usually end. only after the Fed starts cutting rates, a move likely for at least six months.
The story continues
A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 26, 2022. REUTERS/Brendan McDermid
Investors await another busy week of economic data and business earnings. The Labor Department’s July jobs report is the main event of the week, with Friday’s data expected to show that nonfarm payrolls grew by 250,000 in July.
Meanwhile, 150 more S&P 500 companies are on deck to report second-quarter results.
While some revenue came in better than expected, among about 56% of companies that have reported results so far for the second quarter, earnings came in just 3.1% above estimates, for below the five-year average of 8.8%, according to FactSet data. research
Releases from companies like Aflac ( AFL ), Activision Blizzard ( ATVI ), Pinterest ( PINS ) and World Wrestling Entertainment ( WWE ) are available on Monday.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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