Day Traders Diary
SNAP (SNAP) rising on initially, bad news. The owner of Snapchat is up 8% after announcing layoffs of 20% of the working staff. The good news was Snap also provided an update on its revenue performance so far in Q3, saying that it's up 8% year over year. This means the growth rate is tracking ahead of analysts' consensus forecast for revenue during the period to be approximately flat compared to the year-ago quarter. The company also completed a share buyback plan of $500 million or 4% of their outstanding shares.
Verizon (VZ) drops to a seven year low. The once proud telecom giant has been on a steady decline for years now trading at a seven year low as rival T-Mobile has surpassed them in market cap as the largest US telecom firm. Income stock yields 6%, but that is little consolation with the stock down 20% for the year.
The major averages sold off into the close, falling for a for a fourth straight day on Wednesday, the last day of August, putting the summer market comeback in doubt as investors weighed the Federal Reserve's inflation-fighting efforts. The Dow Jones Industrial Average slid 280 points, or 0.88%. The S&P 500 lost 31 points or 0.78%. The Nasdaq Composite fell 66 points or 0.56%.
What began as a strong month for the three major averages ended on a weaker note. The Dow finished August down 4%, while the S&P and Nasdaq posted monthly losses of 4.1% and 4.5%, respectively.
The moves put the Dow and S&P about 6% and 9%, respectively, above their mid-June lows. The Nasdaq is now more than 12% above its low. The summer rally peak came two weeks ago on August 16, a full two months after hitting the lows on June 16.
Investors had been debating for weeks whether the economy is in a recession or heading toward one, and many thought an economic downturn would give the Fed reason to ease up on its rate hiking plan. Fed Chair Jerome Powell reiterated in his Jackson Hole speech Friday, however, that the central bank is committed to curbing inflation and will continue to raise rates even in a recessionary environment.
Powell's comments sparked a sell-off in stocks. On top of Powell's comments, Cleveland Fed President Loretta Mester said Wednesday that she sees benchmark interest rates rising above 4% by early next year. On Tuesday, New York Fed President John Williams called for "somewhat restrictive policy to slow demand."
Stocks could face more headwinds in September, traditionally the worst month for the market
Strategists say stocks could face more turbulence in September, particularly with Federal Reserve rate action hanging over the market.
The S&P 500 has been down 56% of the time in September, since World War II, and it averages a 0.56% decline, according to CFRA. September is the worst month for stocks, but October averages a 0.9% gain. November and December are also positive, on average.
CFRA's Sam Stovall said the S&P could test its June low, but he expects the low to hold. "I'm thinking we need a good shakeout, probably approaching the 3,800 level," he said.
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