Correction talk persists on Wall Street as the hoped-for stock market rebound has hit a wall after yesterday’s gains. The Dow is down about 0.4% today despite upbeat economic news.
The Dow’s failed attempt at a bounce comes despite the strongest reading on the U.S. economy’s services sector since December 2005 and a better-than-expected reading on June factory orders. Investors also seem to be shrugging off a solid second-quarter profit reporting season. Earnings are expected to grow 8% vs. a year ago, which is stronger than estimates heading into the reporting season, according to Thomson Reuters I/B/E/S.
Sentiment, which has been jittery since last week’s steep sell-off sparked by fears of a sooner-than-expected interest-rate hike by the Federal Reserve and geopolitical flare-ups, was hurt today by a profit warning from retailer Target. A bigger-than-expected dip in a closely watched data point tied to China’s services sector also dented investor optimism.
At around 12 noon ET, the Dow Jones industrial average was down 65 points, or 0.4%, to 16,504, erasing much of Monday’s nearly 76-point gain. The inability to rally shows that jitters remain on Wall Street.
Broader U.S. stock indexes were also lower. The Standard & Poor’s 500 was off 0.4% and the Nasdaq composite was down 0.3%.
With stocks still hovering near record highs, and valuations no longer on the cheap side, talk of a market correction continues to make the rounds on Wall Street. At its recent low Monday, the S&P 500 was down as much as 3.2% from its July 24 high. And while that is far from an official correction, defined as a 10% drop, many market pundits are warning that more losses might be in store for the stock market before the current downturn runs its course.