Wall Street ended the day with a flat finish as investors expressed concerns about the longer-term prospects of the U.S. economy and whether stocks had reached their peak. Early gains were largely given up after inflation data came in milder-than-feared. Data revealed that both headline and core consumer prices rose by 0.2% in July, resulting in an annual rise of 3.2% for the headline figure and 4.7% for the core.
During the first hour of trading, all three benchmark indexes saw gains of over 1% as traders predicted that the U.S. Federal Reserve would halt further monetary tightening in 2023 and begin cutting interest rates early next year. However, as the day progressed, stock prices started to dip and fluctuated between positive and negative territory for much of the afternoon.
The Dow Jones Industrial Average rose by 52.79 points or 0.15% to close at 35,176.15. The S&P 500 gained 1.12 points or 0.03% to end at 4,468.83, while the Nasdaq Composite added 15.97 points or 0.12% to finish at 13,737.99.
Meanwhile, in India, the equity market reacted negatively to the Reserve Bank of India’s (RBI) policy meeting on August 10. The RBI opted to maintain an additional 10 percent of Incremental Cash Reserve Ratio (ICRR) for banks, and an upward revision of the inflation forecast further dampened investor sentiments. At close, the Sensex was down 307.63 points or 0.47% at 65,688.18, with the Nifty falling 89.40 points or 0.46% to 19,543.10.
The Indian market initially experienced a subdued start but came under pressure as the day progressed, resulting in extended losses. As widely anticipated, the RBI decided to keep the repo rate steady at 6.5% and retained the stance of withdrawing accommodation.
Among the top Nifty losers were Asian Paints, ITC, Kotak Mahindra Bank, Britannia Industries, and Apollo Hospitals. On the other hand, Adani Enterprises, IndusInd Bank, Adani Ports, Titan Company, and ONGC emerged as the top gainers.
Most sectoral indices, apart from metal and power, ended the day in the red. FMCG and PSU Bank sectors were both down nearly 1%, while capital goods and healthcare were down 0.5% each. The BSE midcap and smallcap indices also closed marginally lower.
As investors grapple with inflation concerns and uncertainties surrounding economic growth, Wall Street’s flat finish and the Indian equity market’s negative reaction highlight the cautious sentiment prevalent among market participants. The path forward will likely be influenced by developments related to inflation, monetary policies, and overall economic recovery.
