Wall Street closes down, Dow snaps longest winning streak since 1987

Wall Street closes down, Dow snaps longest winning streak since 1987

U.S. stocks closed lower on Thursday due to the Bank of Japan’s decision to allow long-term interest rates to rise, which caused U.S. yields to increase. This ended the Dow’s longest winning streak since 1987. The central bank plans to maintain its 0.5% cap for the 10-year government bond yield but may discuss allowing rates to rise above that level. Michael Green, chief investment strategist at Simplify Asset Management, stated that the Bank of Japan’s plans were the main driver behind Wall Street’s performance on Thursday. The higher rates in Japan led to a decrease in the attractiveness of stocks, resulting in the Dow Jones Industrial Average falling 0.67%, the S&P 500 losing 0.64%, and the Nasdaq Composite dropping 0.55%.

The U.S. Federal Reserve raised interest rates by 25 basis points on Wednesday, as expected. However, traders now only see a 20% chance of a surprise rate increase in September. Fed Chair Jerome Powell stated that the Fed staff no longer predicts a U.S. recession but did not rule out another rate hike, emphasizing that the Fed will base its decisions on future economic data.

On Thursday, the Commerce Department released a report showing that the U.S. economy grew faster than expected in the latest quarter, with an advance gross domestic product reading of 2.4%, surpassing economists’ forecast of 1.8%. This strong economic data, combined with the Federal Reserve’s slightly upgraded growth outlook, caused the market to reassess its positioning. Kim Rupert, managing director of global fixed income at Action Economics, stated that the potential for another Fed rate hike, which had previously been priced out, is now being priced back in. Rupert expects a rate hike in September.

Meta saw a 4.40% gain after reporting a jump in second-quarter advertising revenue that exceeded Wall Street’s expectations. On the other hand, Microsoft closed down 2.09% as it outlined an aggressive spending plan to meet the demand for its new AI-powered services. The Nasdaq has been leading the charge on Wall Street this year, with a rise of about 34% driven by outsized gains in megacap growth stocks.

EBay forecasted third-quarter profit below market expectations, causing its shares to decline by 10.53%. Chipmakers Nvidia and Micron rose 0.99% and 5.48% respectively after Lam Research forecasted upbeat quarterly sales. Southwest Airlines tumbled 8.94% after posting a dip in second-quarter profit, while Royal Caribbean surged after lifting its annual profit forecast.

In other news, the European Central Bank raised interest rates for the ninth consecutive time and left the door open for further tightening.

Overall, the Bank of Japan’s decision to allow long-term interest rates to rise had a significant impact on U.S. stocks, leading to a decrease in the Dow’s winning streak. The market also reacted to the Federal Reserve’s rate hike and strong economic data. The performance of individual companies, such as Meta, Microsoft, eBay, and chipmakers, also influenced the stock market.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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