U.S. market indexes were lower Wednesday. For the day, the Dow Jones Industrial Average closed at 18400.88 for a loss of -53.42 points or -0.29%. The S&P 500 was also down, closing at 2170.95 for a loss of -5.17 points or -0.24%. The Nasdaq Composite closed lower at 5213.22 for a loss of -9.77 points or -0.19%. The VIX Volatility Index was higher at 13.41 for a gain of 0.29 points or 2.21%.
In the Dow Jones Industrial Average, the following stocks led losses for the day:
Chevron (CVX, Financial) -1.10%
United Technologies (UTX, Financial) -0.86%
Microsoft (MSFT, Financial) -0.74%
Reports on the economic calendar Wednesday included MBA Mortgage Applications, the ADP Employment Report, the Chicago PMI, Pending Home Sales, the EIA Petroleum Status report and August Farm Prices. MBA Mortgage Applications were slightly higher as borrowers likely took advantage of the current rates. Mortgage applications increased 2.8% for the week, while refinancing applications increased 4%. The ADP Employment report showed an increase of 177,000 payrolls in the private sector. The Chicago PMI was lower at 51.5, down from 55.8. Pending Home Sales increased 1.3% from the previous month. The EIA Petroleum Status report showed an increase of 2.3 million barrels for the week and oil prices were lower. The August Farm Prices report showed agriculture prices down 1.4% for the month and 11% for the year.
Valuations were lower Wednesday as investors primarily watched the ADP Employment report, which showed private sector hiring increasing above expectations at 177,000. While a good thing for the economy, the employment data signaled that the Fed would likely be more aggressive on its timing for interest rate increases.
A more aggressive approach for interest rate increases has investors more cautious on investing for yield. Investors are also digesting second quarter profit data, which did not show the improvement analysts had expected. Investing for yield and the lack of corporate profit growth are the two main factors that have slowed equity momentum and also slightly changed the long term perspective for gains in the equity market.
A CNBC report Wednesday provided more detail on valuations and trading sentiment for equities in the current market environment.
Disclosure: I do not own any stocks included in this article.
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