The stock market faced declines, while Treasury yields saw an uptick, driven by robust US services industry data that raised expectations of a prolonged period of higher interest rates by the Federal Reserve.
Stock Indices Decline
- The S&P 500 closed below the 4,500 mark.
- Nasdaq 100 recorded nearly a 1% fall, primarily led by a drop in big tech stocks due to rising bond rates.
- Apple Inc. witnessed a significant decline in its stock, partially attributed to reports of Chinese agencies prohibiting the use of iPhones at work.
Treasury Yields Surge
- Two-year Treasury yields surged beyond 5%.
- Swap contracts indicated a rise in bets on a Federal Reserve interest rate hike in November, reaching approximately 60%.
Dollar Strengthens
- The US dollar saw a slight increase following a recent rally, prompting Japan and China to intervene in defense of their respective currencies.
Fed’s Beige Book and Economic Growth
Equities remained in the red even after the release of the Fed’s Beige Book, which reported a slowdown in US economic growth and job market expansion in July and August. Furthermore, many businesses anticipate a broad easing of wage increases in the near future.
US Services Sector Shows Strength
In contrast, the Institute for Supply Management’s US services index surged to a six-month high in August, reaching a robust 54.5. A reading above 50 indicates expansion, and this figure surpassed all estimates provided in a Bloomberg economist survey.
Post-Market Highlights
Several companies garnered attention in extended trading:
GameStop
- The video game retailer experienced a 5% surge in stock price after announcing increased sales for its latest quarter.
- GameStop reported second-quarter revenue of $1.164 billion, up from $1.136 billion in the same period the previous year.
American Eagle Outfitters
- The clothing retailer’s stock declined by 2.6% following the release of second-quarter results.
- While revenue matched Wall Street estimates at $1.2 billion, American Eagle’s earnings exceeded expectations at 25 cents per share compared to analysts’ forecast of 16 cents per share.
C3.ai
- C3.ai witnessed a nearly 6% stock price decline in extended trading after projecting a larger-than-expected operating loss for the fiscal second quarter.
- The company forecasted an operating loss ranging from $27 million to $40 million, while analysts expected a loss of $20.5 million.
ChargePoint Holdings
- ChargePoint Holdings’ stock dropped by 10% as the company reported a fiscal second-quarter revenue miss.
- The electric vehicle charging infrastructure company reported revenue of $150 million, falling short of analysts’ expectations of $153 million. ChargePoint also announced a reduction of about 10% in its global workforce.
Verint Systems
- Verint Systems’ stock witnessed a 13% decline in extended trading after missing earnings and revenue estimates for the second quarter.
- The company reported adjusted earnings of 48 cents per share, below analysts’ forecast of 57 cents per share. Revenue came in at $210.2 million, falling short of the estimated $57.4 million.
Dutch Bros
- The drive-through coffee chain experienced a more than 5% loss in after-hours trading.
- This followed the company’s announcement of a public offering of $300 million in shares of its Class A common stock.
Investors and analysts are closely monitoring these market developments and company performances as they navigate the evolving economic landscape.