A Slow Day for the Stock Market

By Connor Smith  |  Wednesday, August 24

The Calm. Stocks snapped a three-trading-day losing streak on the quietest trading day of 2022.

The Dow Jones Industrial Average rose 0.2%, while the S&P 500 rose 0.3%. The Nasdaq Composite beat them both with a 0.4% increase.

Total composite volume, which includes New York Stock Exchange, Nasdaq, NYSE American, and NYSE Arca composite volumes, hit its lowest daily mark since Dec. 31, 2021, according to Dow Jones Market Data. Only 8.84 billion shares traded, compared with a year-to-date average daily volume of 11.98 billion.

Traders who weren't relaxing by the pool or snoozing notifications at the beach were likely looking ahead to Friday morning's Jackson Hole speech by Federal Reserve Chairman Jerome Powell. Barron's Jacob Sonenshine and Jack Denton write that the event has in the past featured market-moving views from central-bank chiefs. They write:

Now, investors are wondering whether Powell will sound more hawkish, in contrast to the minutes from the July meeting, or reaffirm a more dovish bent.

Investors will have some more data to ponder as they try to guess what the Fed will do. Durable goods orders came in flat month over month, down from the 2% increase for June’s result. Pending home sales for July declined 1% month over month after a June decline of 8.9% in June. On Tuesday, numbers showed a drop in new home sales.

For the market, these declines aren’t necessarily unwelcome. They confirm that the Fed’s interest rate hikes—and higher mortgage rates—might be working to cool down demand. If true, the Fed could slow down the pace of interest rate hikes, which it said it is likely to do. 

Perhaps the biggest news of the day was President Joe Biden's long-awaited announcement on student loan relief. The president unveiled his plan to forgive up to $10,000 in federal student loans for those making under $125,000 a year, or up to $20,000 in federal loans for Pell Grant recipients making under $125,000. The cap is $250,000 for households. Barron's Janet H. Cho has more on Biden's student debt plans:

Biden also extended the pause on student loan repayments, scheduled to expire on Aug. 31, “one final time” though the end of the year, saying “It’s time for the payments to resume,” starting in January 2023.

Those with loans from undergraduate schools can cap their repayments at 5%, down from 10%, of their monthly discretionary incomes. And the loan balances of those who borrowed $12,000 or less would be wiped out after 10 years of payments, instead of 20 years. This will allow nearly all community college borrowers to become debt free within a decade, the Education Department estimated.

If all the aid is claimed, the plan would save the average borrower more than $1,000 a month, and cancel all the remaining debt for 20 million borrowers, the White House said.

You can read more from Janet on the impact of Biden's plan here.

DJIA: +0.18% to 32,969.23
S&P 500: +0.29% to 4,140.77
Nasdaq: +0.41% to 12,431.53

The Hot Stock: Norwegian Cruise Line +8.4%
The Biggest Loser: Advance Auto Parts -9.6%  

Best Sector: Energy +1.2%
Worst Sector: Technology +0.06%