Market Overview
The S&P 500 Index ($SPX) and the Dow Jones Industrials Index ($DOWI) closed lower on Tuesday, with the S&P down by 0.55% and the Dow down by 0.19%. Meanwhile, the Nasdaq 100 Index ($IUXX) saw a decline of 0.73%. E-mini S&P futures fell 0.54%, while E-mini Nasdaq futures dropped 0.70%.
Market Sentiment
Stock indexes closed lower as the S&P 500 and Dow retreated from record highs. The decline was attributed to weaknesses in major technology stocks, particularly the “Magnificent Seven.” Further losses were prompted by Fed Chair Powell not providing clues on potential interest rate cuts for next month.
Positive Factors
On a positive note, lower bond yields supported stocks, with the 10-year Treasury note yield falling by 3 basis points to 4.12%. Additionally, energy sector stocks rose as WTI crude oil prices increased by over 1%.
Economic Data
The US current account balance for Q2 was -$251.3 billion, which was better than the anticipated -$256.6 billion. However, the S&P manufacturing PMI for September slipped by 1 point to reach 52.0, lower than the expected 52.2. The Richmond Fed’s manufacturing sentiment survey also dropped unexpectedly to -17, against a forecast of -5.
Fed Commentary
Fed Chair Powell indicated that inflation risks are shifting upward while employment risks are declining, presenting a two-sided challenge for Fed policy. Chicago Fed President Austan Goolsbee suggested the Fed is somewhat restrictive, noting that the neutral policy rate is likely lower than current rates.
Market Focus
This week’s market attention will be on trade developments and key economic releases. Upcoming reports include new home sales and weekly unemployment claims, with expectations indicating slight decreases in both. The Fed’s next meeting is also anticipated, with a 91% chance of a 25 basis point rate cut predicted.
International Markets
International stock markets had mixed results on Tuesday. The Euro Stoxx 50 gained 0.56%, while China’s Shanghai Composite fell to a two-week low, down by 0.18%. Japan’s markets were closed due to the Autumnal Equinox Day holiday.
