Recent Drop In Wall Street Marks One Of The Worst Days In Months

In The News | August 3, 2023

Vigour Times

 

Wall Street experienced a significant decline on Wednesday, marking its worst day in months. Critics claimed that the recent rally was overdone, and this loss of momentum supports their argument. The S&P 500 dropped by 63.34 points, or 1.4%, to reach 4,513.39, which is its most substantial decline since April. This decline comes after the index reached a 16-month high just last week. Similarly, the Dow Jones Industrial Average fell by 348.16 points, or 1%, landing at 35,282.52. Bond yields showed mixed results following Fitch’s downgrade of the US government’s credit rating. Although this downgrade is significant as US Treasurys are traditionally considered extremely safe investments, it has generated less controversy compared to a similar downgrade in 2011, according to the AP.

While the downgrade emphasizes the substantial governmental debt in the US and the challenges it faces in funding programs like Social Security and Medicare, this is not news to investors. Brian Jacobsen, the chief economist at Annex Wealth Management, dismisses the downgrade’s impact, stating that “Fitch’s downgrade is much ado about nothing.” Jacobsen explains that since the US government only issues debt in its own currency, the credit rating holds little relevance. Additionally, investment funds still consider US Treasury securities to be permissible investments, regardless of what credit rating agencies may think.

Big Tech stocks were responsible for dragging down the market on Wednesday. Microsoft, Nvidia, and Amazon all experienced declines of at least 2.5% and were among the most significant contributors to the S&P 500’s drop. Generac Holdings, a company that sells generators and other power products, plummeted by 24.8% after reporting lower profits for the spring than analysts had anticipated. SolarEdge Technologies also suffered, dropping by 17.9%, as it reported weaker profit and revenue growth than expected. The company cited higher interest rates as a factor pressuring its US residential customers. On a positive note, CVS Health saw a 3.4% increase after reporting milder results than expected, and Humana climbed by 5.1% after surpassing expectations for the latest quarter.

 

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As a subject matter expert, Brian Jacobsen, Chief Economist at Annex Wealth Management is often interviewed with individuals not affiliated with the firm. Annex Wealth Management does not have control over the content or opinions expressed by these unaffiliated parties.

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