Wall Street Mixed as Investors Digest Strong US Data, Hawkish Fed Rhetoric

Key Points

• Wall Street was mixed on Thursday as investors weighed stronger than expected data against hawkish commentary from Fed policymakers.
• The S&P 500 was last a tad higher in the 4,280 area, while the Dow was a tad lower.
• Energy was the outperforming sector amid a rally in oil prices.

Wall Street Mixed as Investors Weigh Strong US Data, Hawkish Fedspeak

Major US equity indices were mixed on Thursday amid indecisive trade, as investors monitored strong US data, hawkish rhetoric from Fed policymakers and continued to digest Wednesday’s not as hawkish as feared FOMC minutes release. The S&P 500 index was last changing hands 0.2% higher in the 4,280 area, while the Nasdaq 100 was trading higher by about 0.4% just above 13,500 and the Dow was down about 0.1% just under 34,000.

Weekly jobless claims figures pointed to a US labor market that remains in rude health, a much stronger than expected Philadelphia Fed Manufacturing survey for August further eased concerns that the US economy is in recession. Elsewhere, hawkish Fed policymaker James Bullard called for a 75 bps rate hike next month and rates nearing 4.0% by the year’s end, while fellow Fed policymaker Ester George still sounded very concerned about the US inflation outlook.

Fed’s Mary Daly’s tone was a little softer, calling for rates to move just above 3.0% by the year’s end and then only rise a little further next year. Stocks have rallied in recent weeks on hopes that US inflation has now peaked, that the US economy can avoid recession and that the Fed won’t need to get too aggressive with rate hikes in order to get inflation back to its 2.0% target.

Energy Outperforms as Oil Prices Rally

In terms of the S&P 500 GICS sectors, Energy was the best performer on Thursday, gaining around 2.5% amid a surge in oil prices. Exxon Mobil was last up around 2.5%. Information Technology was the next best performer, gaining just over 0.5%. The worst performer was Healthcare, which lost nearly 1.0%.

It was a strong day for semiconductor stocks. The Philadelphia Semiconductor Index (SOX) was last trading nearly 3.0% higher, with the likes of Nvidia, Qualcomm and Broadcom all posting solid gains.

Retail stocks were in focus once again, with Kohl’s sliding nearly 7.0% after the company cut its top and bottom-line earnings forecast for the rest of this year. Walmart and Home Depot, who posted better than expected earnings earlier in the week, both fell slightly in sympathy.