The US benchmark equity indexes experienced a dip on Tuesday as traders took a closer look at the latest corporate earnings reports. The S&P 500 index fell by 0.2%, closing at 5,555.7. Additionally, both the Dow Jones Industrial Average and the Nasdaq Composite saw minor reductions, with each losing 0.1% and settling at 40,358.1 and 17,997.4 respectively. Among the stock sectors, energy showed the most significant decline, contrasting with materials, which emerged as the top gainers.
In specific company news, United Parcel Service ($UPS) didn't meet the Q2 performance estimates, causing a revision of its full-year revenue projections. This package delivery giant anticipates that domestic customers will continue to reevaluate their service options. As a result, UPS shares saw a sharp decline of 12%, the largest drop on the S&P 500 for the session. Further compounding the day's challenges for investors, Paccar ($PCAR) suffered as well, marking itself as the worst performer on the Nasdaq and the second most significant loser on the S&P 500, sliding nearly 11% due to year-over-year decreases reflected in the company’s Q2 results. General Motors ($GM) announced it would postpone the launch of the Buick brand's first foray into electric vehicles and the reopening of its electric truck battery plant in the US.
This announcement highlighted ongoing challenges in the Chinese market. Even though GM raised its full-year earnings forecast following a better-than-expected Q2 performance, its stock still fell over 6%, ranking among the most substantial drops on the S&P 500 for the day. In a more positive spotlight, Spotify Technology ($SPOT) reported a better-than-anticipated Q2 profit, driven by a surge in its premium subscription growth, which exceeded estimates.
Consequently, its shares soared by 12% on the New York Stock Exchange. In the bond market, the US two-year yield decreased by three basis points to settle at 4.49%, while the 10-year yield dropped slightly, losing less than one basis point to hold at 4.25%. On the economic front, reports indicated a decrease in existing home sales across the US last month as prices reached another record high.
This was accompanied by inventory levels that reached their highest in over four years, signaling an improving balance in the housing market, as per data from the National Association of Realtors. Manufacturing activity in the US Mid-Atlantic region surprisingly tumbled deeper into contraction territory for the current month, attributed to falling shipments and orders, based on recent data from the Federal Reserve Bank of Richmond. Additionally, West Texas Intermediate crude oil prices fell by 1.3%, bringing the cost down to $77.36 per barrel as of Tuesday. In political news over the weekend, US President Joe Biden announced his withdrawal from the presidential race and endorsed Vice President Kamala Harris as the Democratic Party’s nominee.
Market analysts have noted that Biden's exit could heighten uncertainty among investors. Stifel commented in a Tuesday client note that this situation might open pathways for further Federal Reserve policy actions. However, others highlighted that given the prevailing political tensions, the Federal Open Market Committee is likely to adopt a more cautious approach to avoid appearing biased. On a brighter note, gold prices increased by 0.6% to $2,408.70 per troy ounce, while silver saw a small uptick of 0.2%, setting its price at $29.39 per ounce..