The Dow Is Falling, Apple Is Slipping—and What Else Is Happening in the Stock Market Today

Stocks fell Monday after a hawkish message from Federal Reserve Chairman Jerome Powell.


Timothy A. Clary/AFP via Getty Images

The stock market was slipping Monday after Federal Reserve Chairman Jerome Powell triggered a rout from the Jackson Hole economic summit.

In afternoon trading, the Dow Jones Industrial Average was down 38 points, or 0.1%; the S&P 500 was off 0.1%, and the


Nasdaq Composite

dropped 0.4%. The indexes were still above their lowest levels of the day.  

At the annual Jackson Hole symposium, Powell said the Fed would lift interest rates as much as needed to combat high inflation, even if it means slowing the economy. Powell said returning the economy to price stability will take “some time” and will require bringing “some pain to households and businesses,” which he called the “unfortunate costs of reducing inflation.”

Before Friday, “the market got ahead of itself on the false premise that the Fed would be easing off the brakes,” wrote Dave Donabedian, chief investment officer of CIBC Private Wealth US. 

Now, the probability that the Fed lifts the benchmark lending rate by three-quarters of a percentage point in September is up to 71%, according to CME Group data, up from 55% a week ago. 

That has sent Treasury yields higher. The 2-year yield has risen 0.05 percentage point to 3.44%, near a multiyear high. 

That, specifically, is causing the stock market to dip. If Treasury rates are on the rise that could push up rates corporate and mortgage bonds, reducing business and household spending.

“What’s weighing on the market is the fear that Treasury bond yields will rise as the Fed reduces its balance sheet,” wrote Louis Navellier, founder of Navellier & Associates.

With rates creeping higher again, much of the stock market’s concern centers on corporate earnings. If consumers slow spending, companies’ sales and profits will get hit. Earnings in the second quarter still managed to grow year over year, with companies mostly beating expectations., though companies’ guidance was mostly disappointing. Markets can only hope the third quarter will look better than current expectations. 

“Embedded in company earnings releases were multiple mentions of challenges to growth,” wrote Seema Shah, chief strategist at Principal Global Investors. “While earnings season has been positive, persistent challenges indicate an increasingly difficult operating environment, likely limiting profit persistence in the second half of the year.” 

That’s all scary, but one reason the stock market was paring its losses was because bond yields — while up in the past few weeks — are still struggling to shoot above their multi-year highs.

Here are some stocks on the move Monday:



Apple

(ticker: AAPL) was down 1.4% Monday after tumbling 3.8% on Friday. A report from Politico said Justice Department lawyers were in the early stages of drafting a potential antitrust complaint against the iPhone maker.



Meta Platforms

(META) was down 1%. The Wall Street Journal reported that the parent company of Facebook has agreed to settle a lawsuit that accused the social-media giant of allowing third parties, including Cambridge Analytica, to access private user data. 



Dow Inc.

(DOW) declined 1.8% after analysts at KeyBanc downgraded the stock to Underweight from Sector Weight, saying they see “short-term risk/reward for names with meaningful commodity and European exposure skewed to the downside.”



Dollar Tree

(DLTR) stock rose 1% even after Deutsche Bank cut its price target to $163 from $185. 



FactSet

(FDS) stock fell 0.4% even after Deutsche Bank raised its price target to $507 from $463. 

Jason Trennert of Strategas explains why he believes the S&P 500 is heading to 3700 while Ian Shepherdson of Pantheon Macroeconomics offers a bullish outlook for the consumer and labor market.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Joe Woelfel at joseph.woelfel@barrons.com

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