It was a volatile day of trading to end a tough month for stocks as investors digested an onslaught of headlines.
In economic news, weekly jobless claims came in higher than expected (362,000 actual vs. 335,000 estimate), while the final reading on second-quarter gross domestic product (GDP) was upwardly revised to 6.7% from 6.6%.
Additionally, the House and Senate passed a temporary spending bill that will fund the government through Dec. 3. The bill is expected to be signed by President Biden in order to avoid a government shutdown beginning at midnight tonight.
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The measure does not address the debt ceiling, which Congress will need to either raise or suspend by Oct. 18 in order for the U.S. to avoid defaulting on its financial obligations.
After opening in positive territory, the Dow Jones Industrial Average was down 1.6% to 33,843 by the close, while the S&P 500 Index gave back 1.2% to 4,307. The Nasdaq Composite slipped 0.4% to 14,448.
For September, the Dow was down 4.3%, its worst month since October 2020. The S&P 500 was off 4.8% – snapping its seven-month winning streak and marking its biggest monthly loss since March 2020 – and the Nasdaq shed 5.3%.
And for the quarter, the Dow was off 1.9% and the Nasdaq slipped 0.4%. The S&P 500 eked out a 0.2% quarterly gain.
Other news in the stock market today:
- The small-cap Russell 2000 slumped 0.9% to 2,204.
- Bed Bath & Beyond (BBBY) stock plunged 22.1% in the wake of the homegoods retailer's second-quarter earnings report. BBBY reported adjusted earnings per share and revenue well below consensus estimates (4 cents, $1.99 billion actual vs. 52 cents, $2.06 billion expected) and cut its current-quarter and full-year guidance. CEO Mark Tritton cited slowing traffic, the Delta variant of COVID-19 and supply chain issues as "disruptive forces" that impacted the results. CFRA analyst Kenneth Leon downgraded BBBY stock to Hold from Buy, saying "We think the three-year transformation plan is likely to take longer before we see major uptrend in performance."
- CarMax (KMX, -12.6%) was another post-earnings loser. While the used car retailer beat on the top line ($7.99 billion actual vs. $6.91 billion expected), its adjusted earnings of $1.72 per share fell short of the $1.88 per share analysts were expecting. KMX also said pre-owned car sales rose a slimmer-than-anticipated 6.2% in the three-month period. The results prompted CFRA analyst Garrett Nelson to cut his rating on the stock to Hold from Buy, explaining "Cost pressures lead us to a more cautious recommendation on the shares."
- U.S. crude oil futures rose 0.3% to end at $75.03 per barrel.
- Gold futures jumped 2% to settle at $1,757.00 an ounce.
- The CBOE Volatility Index (VIX) rose 2.6% to 23.14.
- Bitcoin prices jumped 5.7% to $43,534.56. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
What to Do About Rising Rates
It's certainly been a September to remember for stocks. One major headline investors had to contend with was a big spike in the 10-year Treasury yield, which ended the month hovering near its highest level since June.
"The big jump in yields happened after the Federal Reserve meeting where Jay Powell made the case for a taper announcement to happen this fall – most likely at the November meeting," says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. "It seems likely that yields will move higher between now and year end."
If that's the case, there are several options for investors looking to position their portfolios for higher interest rates – including with value stocks and financials.
And for a broader list of the best stocks for rising rates, check out this list of 10 names we put together for you.
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