NASDAQ 100, Dow Jones, S&P 500 News: Bracing for Rate Hikes as US-China Tensions Rattle Tech Stocks

Highlights

• Federal Reserve rate hike concerns surge.
• Apple’s stocks tumble amid China’s iPhone ban.
• Defensive utilities signal risk-averse market mood.

Wall Street’s Rate Concerns

Wall Street faced increased jitters as stock futures indicated a possible losing week, largely driven by the apprehension that the Federal Reserve might implement steeper rate hikes than previously assumed.

At 10:30 GMT, Dow Jones futures edged down by 0.11%, while futures for the S&P 500 and Nasdaq dropped by 0.10% and 0.13% respectively.

Concerns became more pronounced as recent data displayed initial jobless claims standing at 216,000, notably lower than the 230,000 projected by Dow Jones’ economists. This sparked debate among investors, with many anticipating a 50% likelihood of a rate boost by the Federal Reserve in November.

Corporate Performances

DocuSign’s shares swelled by 3% in the early hours after the e-signature company surpassed Q2 estimates and painted a positive picture for Q3. Conversely, RH, the home furnishing firm, saw its stocks slump by 8% due to weaker projections for the upcoming quarter. However, the tech sector was shaken as Apple’s shares nosedived 2.9%, following China’s decision to widen iPhone restrictions among state employees, potentially escalating the ban further.

Monetary Policy and Market Movements

The U.S. Labor Department’s recent findings, indicating the lowest unemployment claims since February, brought a two-sided response. While reflecting a recovering job market, it also led investors to suspect the Federal Reserve might persist with its strict monetary stance, further stressing the stock market. These sentiments were echoed by New York Fed President John Williams, emphasizing the necessity for data-driven decisions in the upcoming sessions.

Indices and Sectors

In terms of indices, on Thursday, the Dow Jones Industrial Average witnessed an uptick of 0.17%, while both S&P 500 and Nasdaq saw drops of 0.32% and 0.89% respectively. A key reason for Dow’s resilience was Apple’s lesser influence on it compared to the other indices.

Amidst this, defensive utilities emerged as the lead gainer among S&P sectors, marking a 1.3% rise, a clear indication of the prevailing risk-averse sentiment in the market.

On the tech side, Apple’s suppliers like Skyworks Solutions, Qualcomm, and Qorvo experienced declines exceeding 7%, mainly due to the escalating U.S.-China tensions and their potential repercussions on the tech sector.

Short-term Outlook:  Leaning Bearish

Given the current economic landscape, mixed signals from major corporations, the looming rate hike uncertainty, and the escalating U.S.-China tech feud, markets are poised for heightened volatility. The overall sentiment leans bearish, with investors advised to exercise caution and closely monitor forthcoming data releases, particularly those that could influence the Federal Reserve’s decisions.