Market tries to cut 3-week losing streak. soaring returns

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The market is attempting to snap a three week losing streak. Although the day opened in the red, with a selling trend in all three indices, the Dow Jones and the S&P 500 are now up slightly. 

However, volumes remain low as investors assess the likelihood that the US Federal Reserve will deliver a third, giant rate hike at its next meeting in September. 

Today the index of the non-manufacturing or services sector was published, which stood at 56.9 in August, well above the expected 55.5, reflecting a greater strength in the economy than expected. 

The data increased the probability that the Fed raised interest rates by 75 points again. Indeed, the central bank seems to have more room to continue with this aggressive policy, after also on Friday, the employment report reflected solidity in the labor market, despite the slight increase in unemployment. 

“The modest slowdown in job growth in August may be welcomed by the Fed, but it will not prevent further sizeable rate hikes in the coming months,” YahooFinance quoted a note to clients from Oxford Economics. 

The technology index, which is the most affected by risk aversion, opened the week in the red, but quickly trimmed losses and is now only down 26 points or 0.23%. Among the most active stocks were AMD (NASDAQ: AMD ) and Nvidia (NASDAQ: NVDA ), which fell 2% with the chip sector still affected, but also reflecting a slight recovery. Amazon (NASDAQ: AMZN ) and Meta (NASDAQ: META ) fell 1%.

While the Dow Jones rose 17 points or 0.45%, and the S&P 500 rose 16 points or 0.14%. 

Bond curve still inverted 

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Although the economy is solid, concerns about the effects of the liquidity squeeze are intensifying, causing bonds to also sell off, and treasury yields soaring even higher. 

The yield on the 2-year bond soared 11 basis points to 3,511%, trading at its highest level since 2007. And the 10-year note rose 14 points to 3,336%. This also reflects an inverted curve, with the longer-term bond yielding less than the short-term one, indicating a greater perception that the economy may contract soon. 

Indeed, the Fed has made it clear that the priority of monetary policy is to quell inflation and return the pace of price rises to the central bank’s target of 2%, which calls for aggressive measures, even if they cause a recession, ruling out even the goal of a soft landing.

Bed Bath & Beyond (NASDAQ) in a tailspin 

The market has also been rocked by a 15% drop in Bed Bath & Beyond’s share price. The company previously announced staff layoffs and closure of some 150 stores as a restructuring plan to improve the company’s situation. But the suicide last Friday of the company’s financial director, Gustavo Arnal, in New York, intensifies the fall in the price of the titles and directs the meme shares to a fifth day of losses.

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