Stocks Dip On Rate Worries; Nvidia Backtracks From Record: What's Driving Markets Tuesday?

Near midday during New York’s trading session, a momentum shift rippled through all indices, offsetting Monday’s gains. S&P Global Ratings downgraded five U.S. regional banks, and has concurrently revised the outlook for two additional banks, a move that has stirred apprehension among participants in the market.

The move was largely attributed to hawkish rhetoric from the Federal Reserve.

Thomas Barkin, president of the Richmond Fed, underscored the situation, suggested that a scenario where inflation remains elevated and demand remains robust could trigger the need for a more stringent monetary policy.

As for Nvidia Corp. (NASDAQ:NVDA), although it initially surged to achieve new all-time highs at the outset of the trading session, it promptly reversed course. The semiconductor giant is set to disclose its earnings after the market close on Wednesday.

Cues From Tuesday's Trading:

The S&P 500 fell 0.2%, while the Dow Jones eased 0.4%. The Nasdaq edged 0.1% lower, while small caps in the Russell 2000 fell 0.4%.

US Index Performance On Tuesday

Tuesday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.1% lower to $439.07
• The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was 0.3% lower to $343.50 
• The Invesco QQQ Trust (NASDAQ:QQQ) held steady at $364.08, according to Benzinga Pro data.

Looking at S&P 500’s sector ETFs:

• The Real Estate Select Sector SPDR Fund (NYSE:XLRE) saw the largest daily gains, up 0.4%.
• The Financial Select Sector SPDR Fund (NYSE:XLF) fell the most, down 0.6%.

Latest Economic Data:

In July 2023, existing-home sales experienced a decline of 2.2% compared to the previous month. This brought the seasonally adjusted annualized rate to 4.07 million units, marking the lowest level since January. This figure fell short of the market’s projections of 4.15 million units.

Chicago Fed President Austan Goolsbee is scheduled to speak at 2:30 p.m. EDT and Fed Governor Michelle Bowman, a fellow FOMC member, will also speak at 2:30 p.m. EDT.

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Stocks In Focus:

• Charles Schwab Corp. (NYSE:SCHW) fell over 4.5% after the company announced cost-cutting measures, including reducing its office space and trimming headcount.
• Baidu, Inc. (NASDAQ:BIDU) climbed about 3.3% in reaction to its earnings.
• Hasbro Inc. (NASDAQ:HAS) rose nearly 8%, as Bank of America believes Monopoly Go should lift profit for the toymaker in 2024.
• Macy’s Inc. (NYSE:M) dropped by 13% to hit January 2021 levels, as the company revised demand outlook for the second half.
• Companies reporting after the close include Toll Brothers, Inc. (NYSE:TOL), Urban Outfitters, Inc. (NASDAQ:URBN) and La-Z-Boy, Inc. (NYSE:LZB).

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.4%, with a barrel of WTI-grade crude trading at $79.8. The United States Oil Fund ETF (NYSE:USO) was 0.2% lower to $72.40.  

Treasury yields were steady, with the 10-year yield flat at 4.32% and the two-year yield at 5.02%. The iShares 20+ Year Treasury Bond ETF (NYSE:TLT) was 0.5% higher for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), up 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust (NYSE:FXE), was 0.4% lower to 1.0850.

European equity indexes closed in the green. The SPDR DJ Euro STOXX 50 Etf  (NYSE:FEZ) fell 0.2%. 

Gold rose 0.2% to $1,897/oz, while silver surged 0.4% to $23.37. Bitcoin (CRYPTO: BTC) was 0.6% lower to $25,973.

Staff writer Piero Cingari updated this report midday Tuesday. 

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