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Coming off the long Labor Day weekend, U.S. stocks on Tuesday made small moves. With a light domestic economic calendar and muted news flow, market participants parsed global developments.
By late afternoon, the tech-heavy Nasdaq Composite (COMP.IND) was slightly higher by 0.03% to 14,036.01 points. The benchmark S&P 500 (SP500) was down 0.27% to 4,503.36 points, and the blue-chip Dow (DJI) slipped 0.37% to 34,709.07 points.
Of the 11 S&P sectors, eight were in negative territory, led by Utilities and Industrials. Energy topped the gainers.
The S&P 500 (SP500) last week surged 2.5%, helped by a host of economic indicators that pointed towards a slowing economy and boosted bets that the Federal Reserve could hold off on further rate hikes.
With the stock market closed on Monday, traders returned today to a largely empty economic calendar and a light day in terms of news on the domestic front.
Data on services activity in the Eurozone and China garnered some attention. The services purchasing manager’s index came in lower than anticipated for the overall European area, and for Germany, Italy, Spain and France. Meanwhile, China saw the slowest growth in services activity this year.
“The last 24 hours have been fairly quiet for markets given the U.S. holiday, but the overall tone was slightly negative after what was earlier a very good handover from a strong China market on Monday,” Deutsche Bank’s Jim Reid said.
“However, this faded as the day progressed with losses for bonds and equities in Europe, just as oil prices hit a new high for 2023. The recent run-up in oil prices is already setting us up for some hotter August CPI prints, so any further gains there are going to be a fresh hurdle for central banks in their quest to get inflation back to target,” Reid added.
Crude oil futures (CL1:COM) hit a 10-month high on Tuesday, giving a push to the Energy sector. The gains came amid a Saudi Press Agency report which said the Middle Eastern country will extend its voluntary cut of 1M barrels per day for another three months until the end of December. Additionally, key oil producing nation Russia also announced a similar move by 300K barrels per day.
“We think this move does not translate or should be read by the market as OPEC cutting to offset a weaker prevailing demand outlook,” JPMorgan analysts said in a flash note.
“Rather, it aims to reduce the excess in global inventories, mitigate downside volatility in the oil price and should be viewed as conducive to investment by the sector as we risk major supply shortages in the second half of the decade. Despite meaningful draws in U.S. commercial inventories, we note that they remain within the seasonal range and near 2022 and 2021 levels for this time of the year,” the analysts added.
Turning to the fixed-income market, Treasury yields were higher. The longer-end 10-year yield (US10Y) was up 5 basis points to 4.26%, while the more rate-sensitive 2-year yield (US2Y) was also up 5 basis point to 4.96%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Looking at active movers, Airbnb (ABNB) was the top percentage gainer on the Nasdaq Composite (COMP.IND) after being added to the S&P 500.
