On Tuesday, US benchmark equity indexes exhibited mixed results as the Federal Reserve commenced its important two-day monetary policy meeting, with a decisive announcement on interest rates anticipated for Wednesday. The Nasdaq Composite experienced a decline of 1.3%, closing at 17,147.4, while the S&P 500 fell 0.5%, settling at 5,436.4.
In contrast, the Dow Jones Industrial Average posted gains, increasing by 0.5% to reach 40,743.3. Notably, the technology sector faced steep declines, dropping by 2.2%, while the energy sector led the market gains. Market participants widely anticipate that the Federal Open Market Committee (FOMC) will maintain its benchmark lending rate at current levels during Wednesday's meeting, as indicated by the CME FedWatch tool.
Investors remain vigilant for signals within the FOMC's statement and Fed Chair Jerome Powell's ensuing press conference, which may provide insights or leanings towards a potential rate cut in September. According to analysts at Stifel in a note to clients on Tuesday, "July is too soon for a policy adjustment, and even with September under consideration, a compelling case must be made based on the inflation data from July and August." In the bond market, the yield on the US 10-year Treasury note decreased by 3.6 basis points to 4.14%, while the two-year yield diminished by 2.6 basis points to 4.36%.
In company-specific news, Merck ($MRK) adjusted its earnings guidance for 2024 downwards, factoring in expenses related to its recent Eyebiotech acquisition, despite increasing its revenue outlook midpoint. Following the announcement, Merck’s stock suffered a significant decline of 9.8%, marking the steepest loss on both the S&P 500 and the Dow.
Likewise, Procter & Gamble ($PG), the Dow's second-largest laggard, experienced a drop of 4.8%. Although the consumer goods giant reported year-over-year earnings growth in its fiscal fourth quarter, revenue saw a decrease, attributed to foreign-currency challenges that offset gains in pricing and volume. CrowdStrike ($CRWD) shares also felt the pinch, plunging 9.7%, representing the largest decline on the Nasdaq and the second-worst drop on the S&P 500.
Following a global tech outage earlier this month, Delta Air Lines ($DAL) has reportedly sought legal counsel from attorney David Boies against both CrowdStrike and Microsoft ($MSFT) for potential damages. Microsoft shares dipped 0.9% on Tuesday. In a contrasting scenario, PayPal ($PYPL) recorded impressive gains, emerging as the top performer on the Nasdaq and within the best-performing stocks on the S&P 500, marking an 8.6% increase.
This surge follows the digital payments company’s stronger-than-expected second-quarter results and an optimistic revision of its 2024 earnings guidance. JetBlue Airways ($JBLU) also stood out with a 12% surge in its stock price, announcing its decision to defer approximately $3 billion in capital expenditures through 2029 to enhance cash flow.
The carrier reported a surprising profit for the second quarter. Meanwhile, West Texas Intermediate crude oil prices fell by 0.8%, closing at $75.18 per barrel. In terms of economic indicators, a recent government report highlighted a decrease in US job openings and quits last month. BMO Capital Markets remarked that this data keeps the door open for a potential rate cut in September. In consumer sentiment, an uptick in US consumer confidence was noted, coinciding with positive expectations, while the annual inflation outlook remained stable, as reported by the Conference Board.
Furthermore, US home prices showed a sequential increase in May, mirroring the pace observed in the previous month, despite the annual measure displaying a slowdown, according to S&P Global ($SPGI) and the S&P Dow Jones Indices. In the commodities market, gold prices rose by 1.3% to $2,408.20 per troy ounce, and silver experienced a 2.4% increase, reaching $28.53 per ounce..