The stock market improved slightly in the final hour of trading, with the major indexes all down on Wednesday, but off the day's lows. Investors weighed in on the Fed's Beige Book and earlier strong economic data.
The market had a muted initial response to the Fed's Beige Book report, released at 1 p.m. ET. The survey of the Federal Reserve's 12 regions showed modest economic growth in July and August.
The report highlighted that strong consumer tourism spending may mark the end of the pent-up demand from the pandemic, while retail spending slowed.
New auto sales grew in select areas, mainly due to available inventory and not higher consumer demand.
Overall job growth slowed, with slower hiring but improved retention in the manufacturing and transportation industries.
More districts reported slower price increases. Manufacturing saw improvement in supply chain delays, and backlogs shortened. New orders held steady or dropped in most areas.
Home inventories remained tight while new construction increased and benefited from the lack of home inventory.
Earlier, the August Institute for Supply Management services index came in at 54.5 vs. the 52.4 consensus and 52.7 in July, according to Econoday. A reading above 50 shows expansion in business activity, new orders, employment and supplier deliveries. August's above-50 reading marks the eighth straight month of expansion.
The strong ISM and higher bond yields spooked investors into selling Wednesday on worries that more rate hikes may be needed to slow the economy. Investors once again are worrying about more rate hikes after strong economic data.
The benchmark 10-year Treasury yield added 2 basis points to 4.29%. The CME FedWatch Tool shows a 40.8% chance of a quarter-point rate hike at the Nov. 1 Fed meeting, but little chance of an increase at this month's meeting.
Stock Market Action
The Nasdaq slid 1.1% in afternoon trading and closed below the 14,000 level. The Dow Jones Industrial Average shed 0.6%, while the S&P 500 dropped 0.7%. The Dow Jones and S&P 500 closed below their 50-day moving averages, while the Nasdaq closed a tad above it, finding support.
The small-cap Russell 2000 lost 0.3% and fell further below its 50-day line.
Volume fell on the NYSE and Nasdaq vs. the same time on Tuesday, in preliminary numbers.
The Nasdaq 100-tracking Invesco QQQ Trust ETF fell 0.9%. And the Innovator IBD 50 ETF held up better than the major indexes, and closed relatively unchanged.
Stock Movers: Medical Software Stock Soars
Drone maker AeroVironment gapped up 20.7% in huge volume. The company reported higher-than-expected July-ended quarter EPS and sales late Tuesday. The stock hit a 52-week high in Wednesday's stock market action.
NextGen Healthcare gained an additional 14.7% on top of Tuesday's 6.3% rally, after the company agreed to be acquired by Thoma Bravo for $23.95 per share in cash. Reports on the proposed deal came out Tuesday, which lifted shares. NextGen makes software for medical and dental offices.
Roku recovered from the day's lows to rise 2.9% in heavy, volatile volume. The company announced it will cut its workforce by about 10% to reduce expenses. The streaming entertainment company also raised it fiscal third-quarter revenue guidance.
Roku stock is extended from a 75.45 buy point of a cup-with-handle base, according to MarketSmith pattern recognition. But it appears to be forming a new base.
Glucose monitoring device stock Dexcom climbed 6.5% after it made a presentation Tuesday at the Wells Fargo Healthcare Conference. Dexcom was the biggest gainer on the S&P 500 Wednesday.
Other Stock Movers
Photronics stock sank 6.8% in heavy volume, after the company missed on its July-ended quarter profit and revenue expectations.
Shares of Zscaler tumbled 2.7% after the cybersecurity company reported better-than-expected fiscal fourth-quarter earnings and sales. ZS stock is meeting resistance around 164.
Asana tanked 13.2% in heavy volume despite reporting a smaller-than-expected Q2 loss and higher sales. The stock fell further below its 50-day line and found support at its 200-day moving average.
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