Summer Slowdown. Another quiet day on Wall Street led to a rally in chips and energy stocks, but the rest of market languished in the August sun.
The Dow Jones Industrial Average fell 272 points, or 0.5%, on Monday. The S&P 500 dropped 0.5%. The Nasdaq Composite fell 0.3%.
The PHLX Semiconductor Index-better known as "the Sox"-entered a new bull market by closing 20% above its July 29 low. At 21 days, it was the chip stock benchmark's shortest bear market since March 2020.
The rally in semiconductors followed comments from Commerce Secretary Howard Lutnick that the Trump administration is discouraging U.S. firms like Apple from buying Chinese memory chips. But it wasn't enough to make up for an otherwise weak showing from the majority of S&P 500 members.
Energy was the only major S&P 500 sector that gained after the latest back and forth between the U.S. and Iran. West Texas Intermediate crude oil futures rose 2.6% to $84.50 a barrel.
At the same time, the yield on the 30-year Treasury note settled at 5.31%, the highest point since June 12, 2007, according to Dow Jones Market Data.
My colleague Karishma Vanjani writes that it's typically shorter-duration bond yields, not long-duration yields, that respond to higher oil prices. But recently, the 30-year yield and WTI crude oil have been moving in lockstep. Karishma writes:
To Shriya Samarth, EMEA head of rates at StoneX, this indicates that "inflation in some way, shape, or form is here to stay because of oil. And we're just going to have to learn how to trade that."
The rest of the market likely fell victim to a slow day on the trading floor. Only 13.83 billion shares exchanged hands in the U.S., which is well below year-to-date average daily volume of 18.25 billion, according to Dow Jones Market Data. It was a slow day even by August standards: The average volume this month is 15.6 billion shares traded daily.
That's one big reason to take this week's moves with a grain of sal
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Disney's Next Act
Walt Disney stock has been a dog for about a decade, but it wasn't that long ago that the House of Mouse was known for explosive shareholder returns.
The decline of TV subscriptions, the Covid-19 pandemic, and a rocky CEO succession plan has made Disney a tough stock to own in recent years. The firm's new CEO, Josh D'Amaro, is looking to bring back the magic of the 2010s.
My colleague Angela Palumbo writes that D'Amaro's new plans for the firm were on display during the D23 biennial convention. Angela writes:
New CEO Josh D'Amaro replaced Bob Iger in March, and in May he published a 3,000 word letter to shareholders that outlined his plan to turn around the business. It includes investing in existing and already successful intellectual property while also "taking creative risks" to build new franchises. This weekend's D23 event gave D'Amaro an opportunity to detail his vision for doing just that.
The D23 event took place from Aug. 14 to Aug. 16 and showcased a variety of updates about both new movies and highly anticipated upcoming releases of franchise sequels.
D'Amaro's predecessor, Bob Iger, is keeping busy, too. The former Disney CEO is part of the ownership group that bought a majority stake in the Los Angeles Lakers at a $12.5 billion valuation. (My colleague Andrew Bary explains the surprising tax benefits of buying sports teams here.)
As for Disney, shares were down 3.2% on Monday to $103.50. After years of false starts, Wall Street is more of a "show me" crowd.
The Calendar
Baidu, Home Depot, Jack Henry & Associates, Keysight Technologies, Klarna Group, and Toll Brothers report quarterly results tomorrow.
The Census Bureau reports new residential construction data for July. Economists forecast a seasonally adjusted annual rate of 1.35 million privately-owned housing starts, roughly 80,000 fewer than in June.
The National Association of Realtors releases its Pending Home Sales Index for July. The PHS index, a leading indicator of housing activity, is expected to rise 0.1% month over month, after a 5.4% decline in June.
-Dan Lam
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