U.S. stocks gave up early gains to fall on Tuesday after consumer confidence readings were weaker than expected.
What is happening
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The Dow Jones Industrial Average DJIA, -0.49%, fell 185 points, or 0.6%, to 31,253.
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The S&P 500 SPX, -0.87%, fell 38 points, or 1%, to 3,862.
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Nasdaq Composite COMP, -1.68% fell 202 points, or 1.8%, to 11,323.
On Monday, the main indices deviated to a moderately lower closing. The S&P 500, which has slipped into a bear market, has fallen 18% a year so far,
What drives the markets
The Conference Board’s consumer confidence index fell to a 16-month low of 98.7 in June as Americans became increasingly concerned about high gas and food prices and the health of the economy. Economists polled by The Wall Street Journal predicted that the index would fall to 100 from a revised 103.2 in May.
“The continuing weakness in trust research suggests that the recessionary environment may be self-fulfilling,” said John Lynch, chief investment officer of Comerica Wealth Management, in comments via email.
“While cash in household balance sheets and two jobs for every job seeker supports economic activity, inflation puts pressure on sentiment and can influence consumption and investment decisions,” Lynch said. “For equity investors, this is reflected in the ongoing leadership of defense actions over cyclical ones in the first half of the year.
Global stocks, especially tourism stocks, rose early on Tuesday, with analysts linking support to the Chinese government’s action, which said it would reduce quarantine time for international travelers and those who have come into close contact with patients with COVID. 19 to 10 days out of 21 days.
Beijing will also loosen its testing requirements for quarantined people.
In addition, six of the largest banks in the United States said they had enough capital to maintain or increase their dividends to shareholders after spending enough to cope with the most extreme economic conditions expected next year.
Wells Fargo & Co. WFC, + 1.13% and Goldman Sachs Group Inc. GS, + 0.81% both increased their payouts by 20%, while Morgan Stanley MS, + 2.32% secured growth of 11%. Bank of America Corp. BAC, + 1.11% increased its dividend by 5%, while Citigroup Inc. C, -0.55% and JPMorgan Chase & Co. JPM, + 0.65% kept their dividend unchanged.
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US stocks weighed heavily on Monday after bond yields rose. Analysts had expected that portfolio rebalancing at the end of the month and quarter would support stocks this week, although doubts remain about the sustainability of the rebound from recent lows.
“It is difficult to draw any concrete conclusions so close to the end of the quarter, when flow rebalancing obscures the water,” said Marios Hadjikiriakos, a senior investment analyst at XM.
The yield on 10-year government securities BX: TMUBMUSD10Y increased by 1 basis point to 3.205%. Yields and debt prices are moving against each other.
New York Fed President John Williams said in a television interview that he expects the US economy to slow but not recession as the central bank aggressively tightens monetary policy in a bid to curb inflation. Williams said he expects politicians to consider raising interest rates by another 50 or 75 basis points when they meet in July, after making an increase of 75 basis points this month – the highest since 1994.
The data shows that the US trade deficit in goods shrank by 2.2% in May to 104.3 billion dollars.
The S&P CoreLogic Case-Shiller 20-city index reported an annual increase of 21.2% in April, a slight increase of 21.1% in the previous month. In April, the 20-month index rose by a seasonally adjusted 2.3%. A separate report from the Federal Housing Finance Agency shows a monthly profit of 1.6%. And in the last year, the FHFA index has risen by 18.8%.
Companies in focus
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Shares of Nike Inc. of NKE fell 5.2% after the clothing manufacturer exceeded profit forecasts, but was cautious about margins, especially in China. But Chinese stocks rose after quarantine easing in the world’s second-largest economy.
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JetBlue Airways Corp. JBLU, + 1.43% again increased its offer for discounted carrier Spirit Airways Inc. SAVE, + 2.26% as it tries to outperform its competitor Frontier Group Holdings Inc. ULCC, + 3.21%. Shares of JetBlue rose 0.5%, Spirit rose 1.4% and shares of Frontier rose 2.2% amid a positive tone in the airline sector. The popular US Global Jets ETF JETS, + 1.47% rose 1.6%.
Other assets
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The ICE US Dollar DXY index, + 0.39%, a measure of the currency against a basket of six major competitors, rose 0.5%.
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Bitcoin BTCUSD, -0.85% fell 0.6% to about $ 20,600.
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Oil futures rose, with the US benchmark CL.1 + 2.20% up 1.1% to $ 111 a barrel. GC00 gold futures, -0.08%, were down 0.1% to near $ 1822 an ounce.
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Stoxx Europe 600 SXXP, + 0.27% increased by 0.7%, while the London FTSE 100 UKX, + 0.90% increased by 1.3%.
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Shanghai Composite SHCOMP, + 0.89% and Hong Kong’s Hang Seng Index HSI, + 0.85% each finished 0.9% higher, while Japan’s Nikkei 225 NIK, + 0.66% rose 0.7% .
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