U.S. stocks are trading slightly lower Tuesday morning, attempting to firm up some footing after Monday’s tough start to the week, but not getting very far.
How stocks are trading
- S&P 500 SPX, -0.87% fell almost 17 points, or 0.4%, to 3,981.
- Dow Jones Industrial Average DJIA, -0.43% lost almost 64 points, nearly 0.2%, to 33,883.
- Nasdaq Composite COMP, -1.41% dropped nearly 82 points, or less than 0.8%, to 11,157.
On Monday, the Dow Jones Industrial Average fell 483 points, or 1.4%, to 33947, the S&P 500 declined 73 points, or 1.79%, to 3999, and the Nasdaq Composite dropped 222 points, or 1.93%, to 11240.
What’s driving markets
Wall Street was struggling to rebound from a poor start to the week, after stronger-than-expected U.S. economic data in recent days raised fears about further interest rate rises by the Federal Reserve.
S&P 500 index futures were barely changed on Tuesday, having suffered their worst session in a month on Monday following a robust survey of business condition in the U.S. service sector.
Tuesday morning data on the U.S. trade deficit showed it jumping to a four-month high. The approximate 5% increase is a sign of weakening global demand for American goods and services. The deficit grew to $78.2 billion when economists polled by the Wall Street Journal were expecting an $80 billion shortfall.
This followed Friday’s news that the jobs market was showing few signs that the Fed’s attempts to cool the economy by sharply raising borrowing costs were yet to have a dramatic impact.
“Markets are getting off to a shaky start this week, with solid U.S. economic data releases delaying investors’ hopes that the Fed might become more dovish in the months ahead,” said Stephen Innes, managing partner at SPI Asset Management.
“Ultimately it matters more where the Fed ends up and not how fast they get there, and the tighter-than-expected labour market combined with the boisterous business sentiment index gives more clout to the + 5 % terminal camp. As a result, equities are giving up hard-fought ground thanks to the concern about further rate hikes,” Innes added in a morning bulletin.
Technical analysts noted that the market’s latest relapse came after it failed once again to break above an established downtrend.
Pointing to a chart of the S&P 500, commentators at the MarketEar.com suggested that much of the recent rally off the mid-October low was powered by those investors short the market scrambling to cover their positions rather than any fundamental bullishness.
“The crowd did it again, covering shorts in panic. We are once again below that 200 day [moving average on the S&P 500] that got so many people excited and we saw some bears throw in the towel. A close [on Monday] here or lower and things could get ‘dynamic’ to the downside. Don’t forget the market will become less and less liquid as we approach Christmas,” said MarketEar. com.
Companies in focus
- Textron Inc. TXT, +6.33% rose Tuesday after the company announced that its Bell business won a U.S. Army development contract for the Future Long-Range Assault Aircraft (FLRAA) program. Shares are up 7% in Tuesday morning trading.
- AutoZone Inc. AZO, -3.75% reported better-than-expected revenue and earnings Tuesday, driven by growth in both commercial and retail sales for the seller of automotive replacement parts. Shares are down more than 1%.
- Signet Jewelers Ltd. SIG, +18.21% climbed Tuesday after the company raised its annual sales and earnings outlook for its current fiscal year. Shares are up 15%,
