The Dow Jones index closes the session up

Wall Street ended higher on Thursday, August 18, triumphing over the summer torpor and a market in the process of digestion, on the market generally confident in the health of the U.S. economy.

The Dow Jones Industrial Average gained 0.06 percent to 33,999.04 points, the tech-heavy Nasdaq Index gained 0.21 percent to 12,965.34 points, and the broader S&P 500 Index gained 0.24 percent to 4,283.74 points. Starting in the red at the beginning of the session, the indices finished in the green, without euphoria, with almost all Dow Jones stocks moving in a range of less than 1%.

Investors were favourably influenced by two new positive surprises in the macroeconomic area, with the new weekly unemployment figures significantly below expectations, and the industrial activity index for the Philadelphia region (Northeast), which was positive in August. In contrast, economists were anticipating a third negative month in a row.

These encouraging numbers align with industrial production and retail sales, which also came positively earlier this week. They “leave room for the Fed (U.S. central bank) to continue its aggressive tightening through the end of the year,” argued Edward Moya of Oanda in a note.

In an interview published Thursday, August 18, by the Wall Street Journal, the president of the Fed’s St. Louis (Missouri) branch, James Bullard, known for his tough stance on monetary policy, said he favoured a further 0.75 percentage point increase in the key rate at the next meeting in September.

The macroeconomic picture was somewhat tarnished by housing resales, which posted their sixth consecutive month of decline in July. According to Lawrence Yun of the National Association of Realtors (NAR), “we are seeing a recession in the housing market” in the United States. After four wavering sessions, the S&P 500 is almost where it was on Friday.

“Sometimes when the market has been on a good run, which it has been for the last six weeks, it’s not a big deal if you have sessions, or even weeks, that go sideways, and that’s what’s happening this week,” argued Art Hogan of B. Riley Wealth Management. “Stocks will probably look for direction through the rest of the summer,” even Edward Moya estimated.

The session was animated by the IT infrastructure and components sector, thanks to Cisco (+5.81% to 49.37 USD), a specialist in networking, remote computing (cloud) and cybersecurity, boosted by the publication on Wednesday, 17 August, after the stock exchange, of better than expected results.

Another catalyst was the American semiconductor specialist Wolfspeed (+31.86% to 112.94 USD), whose results exceeded expectations. The sector’s heavyweights, from Qualcomm (+1.92%) to Micron (+2.21%), took the lead, even if the industry expects a slowdown in the coming months following a decline in demand for electronic devices.

Another family at the party, the oil companies, lifted by U.S. demand and the rebound of the price of black gold, such as ExxonMobil (+2.36%), Conoco Phillips (+3.47%) and Marathon Oil (+5.08%). Among the few other stocks welcomed by investors was Tapestry (+1.24% to 37.57 dollars), the holding company that includes the clothing brands Coach, Kate Spade and Stuart Weitzman, whose quarterly profit came out slightly above forecasts.

The cosmetics group Estée Lauder (+1.84% at USD 281.62) capitalized on better-than-expected results, which outweighed Wall Street’s forecasts deemed disappointing for the whole year.

The department store chain Kohl’s was punished (-7.72% to 31.33 USD), after having cut its sales forecasts (now expected to be lower) and margins for its entire 2022 fiscal year (which ends at the end of January). One day follows another and is not the same for “meme stocks”, those shares propelled by enthusiastic smallholders, often without any link with the fundamentals of the listed companies.

After gaining 135% in a little more than a week, the home goods chain Bed Bath & Beyond dropped almost 20% on Thursday. The investor Ryan Cohen announced the sale of all his shares in the group, which is more than 10% of the capital.