Stock Market Experiences Third Consecutive Day of Loss

The stock market has been on a downward trend for three days now, marking the longest stretch of losses since March.

The Dow Jones industrial average decreased by 179 points, or about 0.4%. The S&P 500 saw a drop of 0.5%, while the Nasdaq composite also fell by 0.5%. This is actually the second time this year that we’ve seen three consecutive days of losses; the last time was back on March 28th.

Meanwhile, the yield on two-year Treasury bonds climbed to 3.66%, with the ten-year yield reaching as high as 4.17%.

Investor expectations for a potential half-rate cut by December dropped to 60.5% following the final estimate of second-quarter gross domestic product.

Interestingly, the US economy grew at an annual rate of 3.8%, which is notably lower than previous reports from the Bureau of Economic Analysis. Analysts attributed this revision mainly to increased consumer spending.

This week’s decline comes after suggestions that the S&P 500 might have been “overbought in the short term.”

“While we were impressed by the company’s performance in navigating a tough environment, much of the positive outlook seems to be priced in already,” an analyst mentioned. “If we see volatility in the near future— and I think it could be significant— it’s largely because we’re starting from a relatively high average rating with not much room for error.”

Without major economic data this week, stocks are experiencing some pullback. Eyes will be on the Personal Consumption Expenditure Price Index set to be released tomorrow morning, along with Congress’s efforts to prevent government shutdowns.

Jonathan Klinsky, chief market technician at BTIG, expressed that “stocks are particularly susceptible to negative shifts since the lows in April.” He added that high volatility seems more pronounced. In retail and other sectors, some are beginning to notice downturns, including private equity, which faced its worst decline yesterday since April.

Krinsky pointed out that the S&P is well above the 50-day moving average, noting that “testing the 50 DMA (6446) aligns with what we typically observe as we approach the end of the year, ultimately creating a better entry point for year-end rallies.”