The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.55%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.19%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.73%. December E-mini S&P futures (ESZ25) fell -0.54%, and December E-mini Nasdaq futures (NQZ25) fell -0.70%.
Stock indexes on Tuesday settled lower, with the S&P 500 and Dow Jones Industrials falling from new record highs. Stocks retreated on Tuesday due to weakness in the megacap “Magnificent Seven” technology companies. Stock extended their losses after Fed Chair Powell offered no hints on whether he would support an interest rate cut at next month’s FOMC meeting.
On the positive side for stocks on Tuesday was lower bond yields as the 10-year T-note yield fell -3 bp to 4.12%. Also, energy producers rallied on Tuesday after the price of WTI crude oil rose by more than +1%.
The US Q2 current account balance was -$251.3 billion, a smaller deficit than expectations of -$256.6 billion.
The US Sep S&P manufacturing PMI fell -1.0 to 52.0, weaker than expectations of 52.2.
The US Sep Richmond Fed manufacturing sentiment survey unexpectedly fell -10 to -17, versus expectations of an increase to -5.
Fed Chair Powell said, “Near-term risks to inflation are tilted to the upside and risks to employment to the downside, a challenging situation. Two-sided risks mean that there is no risk-free path” on Fed policy.
Chicago Fed President Austan Goolsbee said the Fed is mildly restrictive and the neutral policy rate is 100-125 basis points below the current rate.
Fed Governor Michelle Bowman said, “Now that we have seen many months of deteriorating labor market conditions, it is time for the FOMC to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility.”
Rising corporate earnings expectations are a bullish backdrop for stocks. According to Bloomberg Intelligence, more than 22% of companies in the S&P 500 provided guidance for their Q3 earnings results that are expected to beat…
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