US stocks slip in early trading

By CNN Business

Updated 10:07 a.m. ET, August 5, 2021
13 Posts
Sort byDropdown arrow
4:08 p.m. ET, August 4, 2021

Stocks end mixed

From CNN Business' Anneken Tappe

US stocks were mixed at Wednesday’s close.

The Dow and the S&P 500 spent the whole session in the red, dragged down by losses in the energy and industrials sectors. General Motors was the worst-performing stock in the S&P, dropping nearly 9% after its earnings missed expectations.

The Dow closed down 0.9%, or 324 points, while the S&P 500 fell 0.5%.

The Nasdaq Composite was the odd one out, closing up 0.1%.

1:26 p.m. ET, August 4, 2021

Inflation is costing tool maker Black & Decker $300 million this year

From CNN Business' Anneken Tappe

Inflation is everywhere and affecting everyone — including tool maker Stanley Black & Decker (SWK).

"We are definitely experiencing significant inflation across many different areas, [with] steel being the biggest category," Don Allan, the company's president and CFO, told CNN's Alison Kosik during the digital live show Markets Now.

Logistics and shipping have their own cost issues as well, Allan added.

"As a result we have about $300 million of new inflation in 2021," he said. Black & Decker is looking to offset these costs through internal efficiencies but also by passing them onto customers.

Over time, the company is also looking to move more manufacturing closer to its end markets to be less reliant on global supply chains.

For example, the company makes about 60% of the products it's selling in North America on the continent already. But the remaining 40% are still coming from primarily Asian markets, complicating the supply chain.

Eventually, North American production capacity should be as high as 80%, Allan said.

1:12 p.m. ET, August 4, 2021

Volatility is coming to a stock market near you

From CNN Business' Anneken Tappe

We're firmly in the second half of the year and the S&P 500, the broadest measure of the US stock market, is up some 17%, last reaching an all-time high yesterday. But can this rally keep going?

"I believe that a pullback or volatility is something that investors should expect," said Omar Aguilar, chief investment office at Schwab, on the CNN Business digital live show Markets Now.

The rally has been spurred by peak economic growth and peak earnings, Aguilar said, and "a lot of the positive news out of the economy and corporations has already been priced into the market."

But that doesn't necessarily mean Aguilar expects a 20% downward correction in the market. Volatility can come in many forms.

Investors are also anxious about when and how the Federal Reserve will stop buying assets.

"The Fed requires at least two strong reports of more than 800,000 jobs created to feel a little more comfortable," Aguilar said. "It is very clear that the growth in jobs is probably not as strong as what the Fed expected."

Economists predict 880,000 jobs were added in July, which would, indeed, be the second jobs report above the 800,000 mark. But after a big miss in the ADP Employment Report on private payrolls earlier today, we'll have to see what Friday will really bring.

1:02 p.m. ET, August 4, 2021

Here's why investors shouldn't bet on inflation being transitory

From CNN Business' Anneken Tappe

If you ask the Federal Reserve, the price hikes on the back of the pandemic recovery are just "transitory," meaning they won't last long and won't keep rising indefinitely. For the market, this has long been a hot button issue — will it, or won't it be a temporary pandemic effect?

"We've never had a situation like this before. We've never had a global viral pandemic, together with quantitative easing and fiscal spending," Nancy Davis, founder and chief investment officer at Quadratic Capital Management, said on the CNN Business' digital show Markets Now.

But the uniqueness of the situation doesn't tell us much about how it will play out.

We just don't know if it will be inflationary in the short-term or long-term," Davis said. And that's why investors shouldn't make a bet either way.

"Whether you think its transitory or not, why not have some inflation diversification in your portfolio," she told CNN's Alison Kosik. Stagflation —- defined by slow economic growth and high unemployment — is the biggest risk to a traditional 60-40 portfolio of stocks and bonds, Davis said.

Quadratic's IVOL ETF (IVOL) is designed to take advantage of increased volatility in the fixed income market, which responds to the Fed's policy. This can serve as a hedge against inflation.

12:16 p.m. ET, August 4, 2021

Stocks are mostly lower at midday

From CNN Business' Anneken Tappe

It's lunchtime and Wall Street doesn't look so hot.

The Dow and the S&P 500 — which notched a new record high yesterday — are both in the red, down 0.8%, or 279 points, and 0.3%, respectively. The Nasdaq Composite is hovering around the unchanged mark.

Energy, utilities and materials stocks are leading the declines.

General Motors (GM) is one of the weakest performers in the S&P, down more than 8% around midday after the company missed earnings expectations before the opening bell.

10:53 a.m. ET, August 4, 2021

Robinhood surges as much as 82%

From CNN Business' Matt Egan

Robinhood cashed in on the meme stock craze. Now the online trading platform itself is turning into the next plaything for the retail trading crowd.

Shares of Robinhood spiked as much as 82% early Wednesday — even though the controversial trading company, which debuted on Wall Street just last week, announced no new developments.

Robinhood rallied so much that trading was halted multiple times due to volatility. In recent trading, the stock was up a more modest 35%.

The frenzy comes after Robinhood finished 24% higher on Tuesday, finally breaking above its initial public offering price of $38.

Retail trading volume climbed tenfold on Tuesday, Reuters reported, citing Vanda Research. Robinhood is also benefiting from an endorsement from a closely watched fund manager. Cathie Wood's Ark Innovation ETF has revealed significant purchases of Robinhood in recent days. 

All of this is in stark contrast with the firm's bumpy takeoff as a public company.

Robinhood priced its IPO at the low end of expectations and then fell sharply soon after it began trading on the Nasdaq last week. The stock ended its first day down 8%, failing to score the first-day pop that new companies covet.

More than any other company, Robinhood has benefited from the recent spike in retail trading volumes. The platform's revenue surged 245% to nearly $1 billion last year as its user growth rose sharply. 

Robinhood has also benefited from the meme stock phenomenon, in which GameStop, AMC and other consumer-facing companies have been driven sharply higher despite little material changes.

However Robinhood did not appear to be very popular with traders on Reddit ahead of the IPO. Commentary on the site's popular WallStreetBets forum indicated that many individual traders remain angry with Robinhood for its decision to curtail trading during January's GameStop rally, and some even threatened to short it.

10:55 a.m. ET, August 4, 2021

Services sector recovery softens in July

From CNN Business' Anneken Tappe

Even though July was another robust month for the economic recovery, the dynamics are once again starting to shift. Business activity in the US services sector fell to its slowest pace since February—but still remained above average, according to IHS Markit.

The pace of US economic growth cooled in July [...] but remained impressively strong to suggest that GDP will rise robustly again in the third quarter," said Chris Williamson, chief business economist at IHS Markit.

Williamson added that stimulus measures, the vaccine rollout and the full reopening of the economy continued to boost demand for goods and services, particularly in consumer-facing industries such as travel and hospitality.

But other measures of the services sector looked better in July. The Institute for Supply Management's services report showed the purchasing managers' index in the sector rising to an all-time high. That said, businesses complain of worker shortages, high costs and supply chain disruptions amid rampant demand.

10:07 a.m. ET, August 4, 2021

Stocks slip to kick off Wednesday's trading

From CNN Business' Anneken Tappe

Wall Street is in the red Wednesday morning, with all three major indexes opening moderately lower and the 10-year US Treasury bond yield also falling.

In early economic data, the July ADP Employment Report disappointed, showing less than half the amount of expected job gains at only 330,000.

The ADP tally and the government’s jobs report aren’t correlated, but this doesn’t bode well for Friday’s numbers from the Bureau of Labor Statistics.

The Dow opened down 0.5%, or 175 points, while the S&P 500 slipped 0.3% after hitting a record high Tuesday.

The Nasdaq Composite opened 0.1.% lower.

The 10-year Treasury yield was near 1.14% around the time of the market open.

8:34 a.m. ET, August 4, 2021

ADP employment report misses expectations

From CNN Business' Anneken Tappe

What a disappointment to start the day.

The ADP Employment Report for July fell well short of economists expectations, showing only 330,000 private sector jobs were added to the economy last month — compared with 695,000 expected.

Is it worker shortages or the Delta variant that is putting more of a damper on things?

In either case, this doesn't bode well for Friday's government jobs report. Even though the two reports aren't correlated, the ADP tally is considered a bellwether for the official count.

Mid-sized businesses added the most jobs, and the services sector, led by leisure and hospitality, again took the lead in the amount of positions added.