On Tuesday, the S&P 500 closed the day slightly higher, as investors were focused on the US economy’s growth trajectory, while the Dow slipped and the tech-heavy Nasdaq also recorded gains.
This year has seen US equities remain under constant pressure, as the benchmark S&P 500 index saw its biggest decline in the first half of decades. This has happened at a time when the US Federal Reserve has become hawkish and switched from its easy-money stance by hiking up the interest rates.
Investors are now gearing up for the minutes of the central bank’s meeting last month, as they price in bets of another 75 basis points increase in the borrowing costs. Economic data is also in focus, as Friday will also see nonfarm payroll data for the June release. Moreover, there is yet another earnings session incoming this month and companies will also be commenting on the slowdown in economic growth and the rise in inflation.
The previous data released showed that there was a higher-than-expected rise in new orders for goods manufactured in the US, which highlighted that despite the Fed’s attempts to cool down the economy, demand continues to remain strong.
In other news, there was a slowdown in business growth throughout the eurozone in June and there was also another surge in European gas prices, which reignited worries about an economic recession in the bloc.
Market analysts said that the possibility of an economic recession happening at the end of this year, or in 2023, was rising. Meanwhile, the labor market in the US has continued to stay strong, which could make things worse as it would signal to central banks that further tightening is needed for the economy to cool down significantly
There was a 0.42% drop in the Dow Jones Industrial Average, as it lost 129.44 points to close at 30,967.82. A 0.16% drop in the S&P 500 was also seen, which fell by 6.06 points to come to 3,831.39. As for the Nasdaq Composite, it shed 1.75%, or 194.39 points, which brought it to a close of 11,322.24.
On Tuesday, there was a decline in benchmark US government bond yields, and an inversion was seen in a key part of the curve that had not occurred in three weeks. This was primarily because risk appetite had taken a blow due to growth concerns and demand for the US debt, considered a safe haven, had gone up.
There was a fall in 8 of the total 11 sectors of the S&P 500, with the largest percentage drop seen in energy and communication services leading to declines. The oil demand outlook has been darkened because of recession worries, due to which they hit their lowest value in five months. There was also a drop in US trading volumes. There was only 1 52-week high recorded in the S&P 500 and the number of lows reached 51. Meanwhile, the new highs for Nasdaq were 13 and the new lows were 308.