The Dow finally snaps historic 13-day rally

The Dow Jones Industrial Average finally ran out of steam Thursday as investors cashed in following a historic streak of 13 straight gains.

The 30-stock index fell 237.40 points, or by 0.67 per cent, to 35,282.72 — dragged lower by shares of Honeywell, which recorded lighter revenue than the Street wanted in their latest quarterly results. A pop in the 10-year Treasury yield back above 4 per cent didn’t help sentiment either. If it had gained a 14th day on Thursday, the index would have tied its record winning streak going way back to 1897.

The Dow’s winning streak was driven by signs that the economy will dodge a recession, falling inflation data and resilient corporate earnings. Wall Street got more evidence on all those fronts on Thursday.

The Dow kept going higher this week even as the Federal Reserve hiked rates to the highest in 22 years on Wednesday. Investors took the rate hike in stride as Fed Chair Jerome Powell said after the decision that the central bank could raise rates again or hold them steady at these levels depending on the data. The central bank meets again in September and traders are betting that upcoming data will cause the Fed to back off.

The S&P 500 was lower by 0.64 per cent to 4,537.41. At one point during the day, the broader index topped the key 4,600 level for the first time since March 2022. Meanwhile, the Nasdaq Composite slid 0.55 per cent to 14,050.11 as investors took some profits in key tech shares like Microsoft and Apple.

Meta Platforms,shares popped 4.4 per cent on better-than-expected results and strong guidance. The company’s numbers were boosted by a rebound in ad revenue. And the latest gross domestic product reading Thursday showed a rise of 2.4 per cent in the second quarter, which was better than the 2 per cent increase expected by economists polled by Dow Jones.

Teck Resources is actively evaluating offers for its steelmaking coal operations and engaging with multiple parties while also defending against a takeover bid from Glencore.

Walmart is partnering with a California startup, Rubi Laboratories, to test technology that captures carbon dioxide from its supply chain and aims to convert it into yarn for clothing, using biochemical processes inspired by how trees grow.

The GDP report also suggested price pressures are easing, with the personal consumption expenditures price index rising 2.6 per cent in the second quarter. That’s lower than the 3.2 per cent increase expected by economists, and the 4.1 per cent rise in the prior quarter.

Turning to commodities, some of the world's largest mining companies are increasingly pessimistic about sustained commodity price gains this year due to an insipid recovery in China leading to a drop in first-half earnings, with Anglo American's CEO stating that economic pressures and slow opening in China suggest a more likely commodity price rally in early next year rather than later this year.

Overall, all US sectors except for Communication Services closed lower overnight. Real Estate was the worst performer.

Futures

The SPI futures are pointing to a 0.6 per cent fall.

Currency

One Australian dollar at 7:20 AM was buying 67.05 US cents.

Commodities

Gold lost 1.21 per cent. Silver dropped 2.41 per cent. Copper fell 0.68 per cent. Oil gained 1.66 per cent.

Figures around the globe

European markets closed higher. London’s FTSE added 0.21 per cent, Frankfurt gained 1.70 per cent, and Paris closed 2.05 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei gained 0.68 per cent, Hong Kong’s Hang Seng added 1.41 per cent while China’s Shanghai Composite closed 0.20 per cent lower.

The Australian sharemarket closed 0.73 per cent higher at 7456.

Ex-dividends

Gryphon Capital (ASX:GCI) is paying 1.47 cents unfranked
Kkr Credit Income Fund (ASX:KKC) is paying 1.67 cents unfranked
Mirrabooka Investments (ASX:MIR) is paying 11 cents fully franked
Perpetual Credit Income Trust (ASX:PCI) is paying 0.6738 cents unfranked
360 Capital Mortgage (ASX:TCF) is paying 3.5 cents unfranked

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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