Technical data

Dow slides into volatile trading after Labor Day as investors assess strong data and rising rates

U.S. stocks were whipped on Tuesday in a volatile trading session at the start of the holiday-shortened week as investors weighed what strong economic data and rising rates mean for the aggressive policy tightening campaign. Federal Reserve.

The Dow Jones Industrial Average fell 92 points, or 0.30%, rebounding from daily lows, boosted by defensive stocks such as Johnson & Johnson and Coca-Cola. The S&P 500 slid 0.18% and the Nasdaq Composite fell 0.42%, weighed down by falling tech stocks.

At the same time, bond yields jumped, adding to the rout in equities. The 10-year US Treasury yield jumped 0.162 percentage points to 3.353% before stabilizing lower, up about 0.13 percentage points to 3.342% as investors sold bonds. Yields move inversely to prices.

The moves came after August ISM data on Tuesday morning came in stronger than expected at 56.9 vs. 55.5 expected. The report follows Friday’s jobs release, which also beat Wall Street expectations, showing a stronger-than-expected U.S. economy.

Both reports come ahead of the Federal Reserve’s September meeting, where they are expected to raise interest rates again. Better than expected economic data may mean that the central bank continues to act aggressively in raising interest rates.

On Friday, the major averages closed their third consecutive negative week. The Nasdaq Composite posted its first six-day losing streak since 2019, ending the session down 1.3%, while the Dow Jones erased a 370-point gain on Friday to close down about 1, 1%. The S&P lost 1.1% to its lowest close since July.

“Bulls hoping for a rebound will do so during a shortened Labor Day week that has historically paralleled September and its underperforming record: Losses have been slightly less frequent over the past three decades, but the volatility has been higher,” said Chris Larkin. , Managing Director of Trading for Morgan Stanley’s E*Trade.

In the holiday-shortened week, investors are eagerly awaiting speeches from Federal Reserve chairs and another rate hike decision from the European Central Bank expected later this week.