S&P 500 ends lower as Fed rate hikes speculations rise after strong ISM data

• S&P 500 closes down 0.70%, Nasdaq 100 drops over 1%, and Dow Jones Industrial Average falls 0.57%.
• ISM Non-Manufacturing data for August fuels speculation of an additional rate hike by the Fed.
• CME FedWatch Tool shows a 50% chance of a 25 bps rate hike by the Fed in November.

Wall Street finished Wednesday’s session with losses of between 0.57% and 0.70% after data put into the table additional rate hikes by the US Federal Reserve (Fed), as business activity accelerated in the services sector. Consequently, US Treasury bond yields rose, and the Greenback hit a 10-month high before finishing the session almost unchanged.

The S&P 500 ended the session with losses of 0.70%, while the heavy-tech Nasdaq 100 dropped more than 1%, and the Dow Jones Industrial Average slumped 0.57%.

Wall Street indices close in the red; Technology, Consumer Discretionary, and Health sectors lead the decline

Sector-wise, the biggest loser was Technology, followed by Consumer Discretionary and Health, each down by 1.37%, 0.97% and 0.61%. On the flip side, Utilities and Energ post modest gains of 0.20% and 0.14%.

The Institute for Supply Management (ISM) revealed that Non-Manufacturing activity improved in August, sparking speculations that an additional rate hike by the Fed is on the table. According to money market futures, there’s a 50% chance the US central could hike 25 bps at the November meeting, as shown by the CME FedWatch Tool.

In the meantime, the Federal Reserve released its Beige Book, which showed modest economic growth and inflation slowed in most parts of the country.

Boston Fed’s President Susan Collins said the US central bank needs to be patient when deciding the path of monetary policy while emphasizing the Fed’s commitment to bring inflation toward its 2% target.

WTI rose almost by 1% in the commodity space underpinned by Saudi Arabia and Russia’s 1.3 million barrel supply cut as traders eyed the release of US crude oil inventories.

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