U.S. stocks declined, with the Standard & Poor’s 500 Index on track for its worst month since May 2012 and equities poised to end a two-day relief rally.
The S&P 500 lost 0.3 percent to 1,981.48 at 9:51 a.m. in New York, after the gauge posted its best back-to-back advance since March 2009. The Dow Jones Industrial Average slipped 76.20 points, or 0.5 percent, to 16,578.57.
S&P 500 on track for its worst month since 2012
S&P 500 on track for its worst month since 2012
“We’re not done with all the volatility in equities,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “The Dow gave back a 300 point gain and then ended up more than 300 yesterday so it’s hard to say how today will be judged. I think the worst is over, but are we out of the woods yet? No -- we’re still going to have a lot of volatility.”
The S&P 500 yesterday capped its best two-day rally since the beginning of the bull market in 2009, helped by data showing stronger-than-expected U.S. economic growth. The Dow had its strongest back-to-back advance since December 2008. Global equities had lost as much as $8.4 trillion in value after China’s unexpected devaluation of the yuan earlier this month spurred concern the world’s second-biggest economy was on the brink of a deeper slowdown. The S&P 500 closed Thursday down 5.5 percent in August.
Data today showed consumer spending climbed in July as incomes grew, showing the biggest part of the U.S. economy was off to a good start to the quarter. The 0.3 percent advance matched the prior month’s gain, according to the Commerce Department. The median forecast in a Bloomberg survey of economists called for a 0.4 percent increase. Wages rose by the most this year, and the report showed inflation remained tame.
S&P 500 whipsawed by gains and losses this week
S&P 500 whipsawed by gains and losses this week
Inflation is the theme at an annual symposium in Jackson Hole, Wyoming this week where Federal Reserve officials and economists have also been discussing market fallout from China’s slowdown that has cast doubt on whether the Fed will raise rates next month. Traders are now pricing in a 30 percent chance the central bank will act in September, down from almost even odds before China’s surprise move to devalue its currency earlier this month.
St. Louis Fed Bank President James Bullard said in a Bloomberg Television interview Friday that while world financial markets are volatile, U.S. fundamentals are good and the interest rate-setting Federal Open Market Committee shouldn’t alter its forecast for the economy.