Dow is falling more than 200 points according to job data, GM earnings are disappointing


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U.S. stocks fell on Wednesday after earnings from a major carmaker and a report on private sector jobs were lower than expected.

The Dow Jones Industrial Average lost about 288 points or 0.8%. The S&P 500 slipped 0.4%, while the Nasdaq Composite was slightly higher. The decline came after the S&P 500 broke a two-day losing streak on Tuesday and set a record close, increasing its 2021 gain to more than 17%.

Shares of General Motors fell about 7%, heavier in the wider market, after carmakers missed earnings expectations in the second quarter. The carmaker, however, has raised guidelines for a key measure of profit by the end of the year.

The ADP survey on private payrolls showed a gained 330,000 jobs in July, significantly less than the consensus estimate of 653,000. The official report of the Ministry of Labor, which usually has a greater impact on investors, will be released on Friday.

Earnings in the second quarter and economic data were generally strong, but some investors are worried that the recovery from last year’s pandemic will recover from now on.

“At the moment, I think the market is moving a bit cautiously with the triple peak theory – the potential peak of earnings, the peak of economic growth and the potential peak of incentives that are visible, both in fiscal and monetary perspective,” said Chris Osmond, chief investment officer. Prime Capital Investment Advisors.

“While earnings and growth may be at their peak, that doesn’t mean they will become negative, just slow down,” Osmond added.

Cyclical stocks tied to the economic recovery on Wednesday were some of the weakest. Energy inventories fell, along with oil prices, and Chevron fell more than 2%. Banks and industry, like Honeywell, have also struggled. Shares of Coca-Cola lost more than 1%.

This year’s readings in the labor market are coming as the delta variant of Covid-19 has spread across the United States, which has led to new restrictions and mandates for some companies and local governments.

“We need consumers out there and to spend money, not to sit at home with nowhere to go and / or worry about coronavirus,” Wells Fargo Investment Institute strategist Scott Wren said in a note. “But based on the fact that major capital indices are close to all-time highs, a rational argument can be made that investors are not so concerned at the moment about the potential of the Delta variant to shake up the economy.”

The 10-year treasury yield traded close to 1.8% on Wednesday after falling below 1.13% earlier in the session. Lower bond yields in recent weeks have tended to create a bearish tone for stocks, raising concerns about the pace of economic returns, although the relationship seemed to have broken up on Wednesday.

Yields reduced their losses after the ISM Service Procurement Manager Index reached a record high in July, exceeding expectations.

Federal Reserve Vice President Richard Clarida said on Wednesday that he expects the central bank to raise interest rates from 2023 and that there is a risk of rising inflation.

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Meanwhile, Robinhood shares jumped more than 60%, continuing an unstable jump after last week ‘s soft initial public offering.

In regular trading on Tuesday, the Dow Jones Industrial Average jumped 278 points, or 0.8%, to 35,116.40. The S&P 500 strengthened 0.8% to a new record high of 4,423.15. The Nasdaq Composite rose 0.6% to 14,761.29.

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