The Dow Jones Industrial Average and the S&P 500 closed at record highs on Tuesday as markets analyzed the latest economic data. The Dow rose 0.2% to 42,208.2, while the S&P 500 advanced 0.3% to 5,732.9. The Nasdaq Composite increased 0.6% to 18,074.5, with materials leading the gainers among sectors, while financials saw the steepest decline. In the latest economic developments, US home prices experienced an increase in July, marking the 14th consecutive monthly record.
However, the pace of annual growth has decelerated to the slowest level of 2024, according to S&P Global's division, S&P Dow Jones Indices. Meanwhile, the Federal Housing Finance Agency noted that home prices edged up 0.1% on a seasonally adjusted basis in July, with June's prior 0.1% decrease being revised to a flat level.
The consensus expectation was for a 0.2% rise, as compiled by Bloomberg. Housing affordability saw improvements in August, supported by declining mortgage rates, yet the typical American household continues to earn significantly less than necessary to afford a home, according to Redfin's analysis. Consumer confidence within the US took a sharp downturn, marking the most significant drop in roughly three years, while the annual inflation outlook edged upward, as reported by the Conference Board. In manufacturing news, activity in the US Mid-Atlantic region reported an unexpected decline, moving deeper into contraction as shipments and employment worsened, per the Richmond Fed's findings. In bond markets, the US two-year yield dropped four basis points to 3.54%, while the 10-year rate declined by one basis point to 3.73%. On Wednesday, the Federal Reserve made a notable decision to reduce interest rates by 50 basis points.
Fed Governor Michelle Bowman, expressing her preference for a more measured approach, indicated on Tuesday her support for a smaller initial cut of 25 basis points amidst inflation concerns. "I preferred a smaller initial cut in the policy rate while the US economy remains strong and inflation remains a concern, despite recent progress," she stated during remarks at a Kentucky Bankers Association event. Atlanta Fed President Raphael Bostic and Minneapolis Fed President Neel Kashkari remarked on Monday that the FOMC made the appropriate decision last week, although future policy shifts are likely to depend on forthcoming economic data. In the energy sector, West Texas Intermediate crude oil rose by 1.7% to $71.54 a barrel on Tuesday.
"Oil's positive momentum continues as tensions in the Middle East are heightened alongside emerging hurricane threats for the US and Mexico," ING reported. In company-specific news, shares of Chinese e-commerce giant PDD surged by 11%, making it the top performer on the Nasdaq. Chip-making powerhouse Nvidia was the second-best performer on the Nasdaq and among the leading gainers on the S&P 500, with an increase of 4%. Conversely, Visa's shares dipped 5.5%, positioning it as the worst performer on the Dow and the second-steepest decline on the S&P 500.
This was in light of a civil antitrust lawsuit filed by the US Department of Justice in a federal court against the company for allegedly monopolizing the debit card market. In commodities, gold prices rose by 1.3% to $2,687.80 per troy ounce, while silver experienced a jump of 4.7%, reaching $32.55 per ounce..