Dow nears breakeven for 2020 as Fed tweaks strategy

The Dow tested its February highs

U.S. equity markets ended mixed in a choppy trading day as the Dow Jones Industrial Average briefly turned positive for the year before slipping back back below the breakeven line.

The index finished with a gain of 160 points, or 0.57%, ending about 46 points below its 2019 closing level.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 34483.72 -652.22 -1.86%

Investors digested a drop in first-time unemployment claims and the Federal Reserve's policy shift intended to compensate for long periods of low-interest rates.

The S&P 500 gained 0.17% and the Nasdaq Composite posted a loss of 0.34%.

Ticker Security Last Change Change %
SP500 S&P 500 4567 -88.27 -1.90%
I:COMP NASDAQ COMPOSITE INDEX 15537.690666 -245.14 -1.55%

Jobless claims of 1.006 million for the week through Aug. 22 were 98,000 lower than the week before and in line with analysts' projections. Still, they took the total since coronavirus lockdowns began to 58.4 million, nearly 37% of the entire U.S. workforce.

That may worsen if Delta and American airlines follow through on plans to lay off 21,000 more workers barring federal aid, though the White House is working to prevent that. American Airlines plans to furlough 19,000 workers and late Thursday United Airlines said it may furlough close to 3,000 pilots by October, according to reports.

Ticker Security Last Change Change %
DAL DELTA AIR LINES, INC. 36.20 -0.04 -0.11%
AAL AMERICAN AIRLINES GROUP, INC. 17.69 -0.05 -0.28%
UAL UNITED AIRLINES HOLDINGS, INC. 42.26 -0.28 -0.66%

In monetary policy news, Federal Reserve Chairman Jerome Powell said the central bank will modify its strategy for achieving 2% inflation, the level needed to maintain stable economic growth, to allow wider expansion than that after periods of below-target performance.

The adjustment accounts for some of the stresses of sustained low-interest rates, the Fed explained. The central bank cut rates to nearly zero earlier this year after leaving them at that level for roughly seven years following the financial crisis. Economists have said low rates, which buoy spending in the short term, also hurt retirement savings over time.

Bank stocks rallied following the Fed's announcement and as the 10-year note yield rose to 0.744%, the fourth consecutive advance this week. Gold slipped $19.10 to $1,921.60 an ounce.

Ticker Security Last Change Change %
JPM JPMORGAN CHASE & CO. 158.83 -2.40 -1.49%
BAC BANK OF AMERICA CORP. 44.47 -1.12 -2.46%
C CITIGROUP, INC. 63.70 -1.34 -2.06%

Meanwhile, West Texas Intermediate crude oil dipped 35 cents to $43.04 per barrel after Hurricane Laura was downgraded to a tropical storm after making landfall in Cameron, Louisiana as a Category 4 storm. The damage is ongoing in the region.

Oil majors Exxon Mobil Corp. slipped while Chevron Corp. posted a modest gain.

Ticker Security Last Change Change %
XOM EXXON MOBIL CORP. 59.84 -1.75 -2.84%
CVX CHEVRON CORP. 112.87 -1.98 -1.72%

Elsewhere, Abbott Laboratories received Food and Drug Administration approval for a $5 COVID-19 test that provides results in 15 minutes. The tests, which are 97% accurate, will begin shipping in September.

Ticker Security Last Change Change %
ABT ABBOTT LABORATORIES 125.77 -2.26 -1.77%
UAA UNDER ARMOUR, INC. 23.59 -0.80 -3.28%

Under Armour Inc. was sued for breach of contract by the University of California Los Angeles, which is seeking more than $200 million after the sports apparel maker terminated their 15-year, $280 million deal just four years in. Under Armour cited force majeure, a provision covering unpredictable circumstances, and the university’s struggles in football and basketball as reasons for ending the pact.

Looking at earnings, Tiffany & Co. reported mixed quarterly results helped by a rebound in its China business. Stores open at least 12 months saw sales slide 24% from a year ago.

In retail Abercrombie & Fitch Co.'s digital sales rose 56% in the three months through Aug. 1, even as the coronavirus store closures dragged overall revenue down to $698 million.

Ticker Security Last Change Change %
TIF n.a. n.a. n.a. n.a.
ANF ABERCROMBIE & FITCH CO. 36.00 -1.92 -5.06%
XPEV XPENG, INC. 55.00 +3.64 +7.09%

Meanwhile, Chinese electric-car maker XPeng Inc. is set to raise $1.5 billion in an initial public offering. Shares of the Tesla Inc. rival will trade on the New York Stock Exchange under the ticker XPEV.

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In Europe, France’s CAC dropped 0.64%, Germany’s DAX slid 0.71% and Britain’s FTSE slipped 0.75%.

Asian markets ended mixed, with China’s Shanghai Composite adding 0.61% while Hong Kong’s Hang Seng and Japan’s Nikkei fell 0.83% and 0.35%, respectively.