Markets ended mostly lower on Tuesday as the Trump administration stuck to its hard-line stance on trade. This saw chipmaker stocks once again taking a hit, resulting in the S&P 500 closing lower. Also, utilities declined ahead of the Fed’s expected interest rate hike, which offset gains made by energy stocks.
Concerns about continuing trade tensions also overshadowed strong economic data. Consumer confidence for September increased to its highest level in 18 years. However, the Nasdaq ended marginally higher, as shares of major tech companies rallied.
The Dow Jones Industrial Average (DJI) declined 0.3%, to close at 26,492.21. The S&P 500 fell 0.1% to close at 2,915.56. The Nasdaq Composite Index closed at 8.007.47, gaining 0.2%. A total of 6.6 billion shares were traded on Tuesday, lower than the last 20-session average of 6.7 billion shares. Decliners outnumbered advancers on the NYSE by a 1.20-to-1 ratio. On Nasdaq, a 1.00-to-1 ratio favored advancing issues.
How did the Benchmark Perform?
The S&P 500 gave up 3.81 points, as utilities and interest-rate sensitive banking stocks declined. The Financial Select Sector SPDR (XLF) and Utilities Select Sector SPDR (XLU) declined 0.4% and 1.4%, respectively.
The Energy Select Sector SPDR (XLE) rose 0.6%, as Brent-oil hit a four-year high, boosted by imminent U.S. sanctions on Iranian exports. Chipmaker stocks also weighed on the S&P 500 index. Shares of Intel Corporation (INTC - Free Report) declined 2.1%. Intel has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Dow shed 69.84 points, after rising as much as 72.80 points at one time of the day. The Dow closed for the second consecutive day, while the S&P 500 extended its losses for the third straight session. The tech heavy Nasdaq added 14.22 points, recording its second straight day of gains. Shares of Alphabet, Inc. (GOOGL - Free Report) gained 2.1%. Also, shares of Apple, Inc. (AAPL) and Amazon.com, Inc, (AMZN - Free Report) increased 0.6% and 2.1%, respectively.
Interest-Rate Hike Expectation Weighs on Markets
Investors have been closely following the Fed’s two-day monetary policy meeting, which ends Wednesday and is likely to result in another 25 basis points interest-rate hike. On Tuesday, investors felt jittery ahead of the interest-rate hike.
Financial stocks, which are sensitive to interest-rate hike, weighed on markets, with the Financial Select Sector SPDR (XLF) declining 0.4%. Also, utilities took a hit. Utilities tend to benefit in low-interest rate environments, because of their solid dividends.
The anticipated interest-rate hike put utilities under pressure on Tuesdays, leading to huge selloffs. This offset gains made by energy stocks, as Brent oil hit a four-year high, owing to imminent U.S. sanctions on Iranian exports.
Trade war Fears Overshadow Strong Economic Data
On Tuesday, the Conference Board said that U.S. consumer confidence rose unexpectedly to 138.4 in September, reaching close to levels last seen in 2000. This shows the underlying strength in the U.S. economy and the labor market. However, home prices rose 0.2%, its slowest pace since last summer.
But trade war fears overshadowed the robust economic data, after President Donald Trump at the United Nations General Assembly said that the United States “will no longer tolerate abuse” on trade. Trump’s comments came after U.S. Trade Representative Robert Lighthizer said that the United States is ready to move ahead with a trade deal with Mexico but excluded Canada. The Trump administration’s hard-line stance on trade reignited fears among investors.
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