US Stock Market Falls For 3-Sessions In Row: Dow Jones Drops 497 Pts, Nasdaq Crashes 513 Pts; Fed Minutes Eyed

The US stock market has witnessed a bearish trend for three sessions in a row ahead of the US Federal Reserve's minutes of a meeting scheduled on August 19. In the latest session, the Dow Jones dropped by 0.22%, while the S&P 500 dipped over 0.6%, and the Nasdaq Composite crashed by over 1.3% due to heavy selloffs in semiconductor and tech stocks. Also, rising treasury yields and elevated oil prices added to the woes. The yields and oil will continue to be riskier for equities as long as there is uncertainty in Middle Eastern conflict. While investors will focus on FOMC members' opinions on rate hikes in the upcoming monetary policy. There is clear dissent among the Fed committee.

US Stock Market Crashes For 3 Sessions In Row:

On August 18, the Dow Jones ended at 53,343.40, down by 116.38 points or 0.22%, while the S&P 500 slipped by 53.30 points or 0.7% to close at 7,691.76. Meanwhile, the tech-heavy index emerged as top loser with over 1.3% or 355.20 points decline to finish at 26,289.71.

For the latest performance, Trading Economics data highlighted that rising global bond yields and firmer oil prices also dampened sentiment, with the 30-year Treasury yield reaching a 19-year high this week. On the geopolitical front, the US and Iran showed little indication of reaching an agreement to end the conflict and reopen the Strait of Hormuz in the near term.

Among underperformers included AI-linked chipmakers with Micron declining 7%, Sandisk crashing by 9%, Nvidia dropping 2.3%, Intel plunging by 7% and AMD falling by over 4%.

However, all three indices on Wall Street are down for three days straight. From August 14th to August 18th, the Dow Jones dropped by 496.59 points and S&P 500 is down by 107.23 points. However, Nasdaq crashed by 513.32 points.

US Stock Market Ahead:

On August 19th, investors will focus on Fed minutes of July meeting and earnings of top retailers including Target, TJX and Lowe's.

"Soft inflation and jobs data have pulled down the implied probability of a hike next month to just 30%," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR).

"We continue to expect the Fed to remain on hold, but the risk of a hike has not disappeared. The recent data hasn't likely changed the mind of the nine FOMC members who voted for a hold last month, but any hotter-than-expected data over the coming months could still give them a reason to hike," added Martin.

In July, the FOMC decided to keep federal fund rates unchanged for the fifth time in a row, at 3.50% to 3.75%. However, in the latest policy, there was a clear dissent between Fed members. Three of them voted for a 25 basis points rate hike, which opens the possibility that the Fed might hike the rate anytime in 2026 due to inflationary pressure arising from the West Asia conflict.

Here's what we know so far: US inflation cooled to 3.4% in July, but consumer sentiments and retail sales weakened. Also, the US economy stunned with 23,000 job losses in July, far worse than the street expectation of an 80,000 increase. Meanwhile, the unemployment rate is at 4.1%.

That said, Fed minutes are pivotal to understanding the upcoming policy stance.

Aside from Fed minutes, companies will report their quarterly earnings, which will give stock-specific actions on Wednesday. These include Analog Devices Inc. (ADI), BILL Holdings Inc. (BILL), Coty Inc. (COTY), Estee Lauder Companies Inc. (EL), Full Truck Alliance Co. (YMM), Lowe's Companies (LOW), Nordson Corp. (NDSN), Target corp. (TGT), TJX Companies Inc. (TJX), Viking Holdings Ltd. (VIK), and ZIM Integrated Shipping (ZIM).

Among other economic data to watch out on August 19 are --- EIA Crude Oil Inventories and the MBA Mortgage Applications Index.

Latest US-Iran Conflict News:

The reopening of Hormuz remains unclear.

A report of Trading Economics revealed that President Donald Trump said there were no ongoing negotiations with Tehran while confirming that the US naval blockade remains in effect. Shipping risks in Hormuz also remain despite Trump's claim that the waterway is open and mines have been cleared, with limited traffic still passing through the strategic route. Iranian forces have intensified hostilities over the past week, while eight attacks on vessels transiting Hormuz, including ships linked to the UAE and Saudi Arabia, have been reported so far this month.

Hence, these will fuel both yields and crude, which makes it dire for equities to hedge gains in such geopolitical uncertainties.

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