Dow Jones, S&P 500 drop for fourth day, major averages end August with losses

Stocks fell for a fourth straight day on Wednesday, the last day of August, casting doubt on the summer market’s return as investors assessed the Federal Reserve’s inflation-fighting efforts.

The Dow Jones Industrial Average slipped 280.44 points, or nearly 0.9%, to 31,510.43. The S&P 500 was down about 0.8% to end the day at 3,955.00, and the Nasdaq Composite fell about 0.6% to 11,816.20. The major averages were higher earlier in the day.

What started out as a strong month for all three major averages ended on a weaker note. The Dow Jones ended August down nearly 4.1%, while the S&P and Nasdaq posted monthly losses of 4.2% and 4.6%, respectively.

These moves put the Dow and S&P 6.3% and 8.7%, respectively, above their mid-June intraday lows. The Nasdaq is now 11.8% above its low. The peak of the summer rally came two weeks ago on August 16, a full two months after the mid-June low.

Investors had been debating for weeks whether the economy was in a recession or heading into one, and many believed that an economic slowdown would give the Fed reason to ease its rate hike plan. Fed Chairman Jerome Powell, however, reiterated in his Jackson Hole speech on Friday that the central bank is committed to curbing inflation and will continue to raise rates even in a recessionary environment.

“Markets were banking on limited rate hikes and quick rate cuts,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “The speech was clear, however, that the increases will be bigger and the cuts more delayed than expected.”

Powell’s comments sparked a stock selloff. Additionally, Cleveland Fed President Loretta Mester said Wednesday that she expects benchmark interest rates to rise above 4% early next year. On Tuesday, New York Fed President John Williams called for “a somewhat restrictive policy to slow demand.”

Read the coverage of the mercado de hoy en español here.

Correction: The Dow Jones was down 0.5% on the day. A previous version distorted the decline.

Comments are closed.