On Tuesday, US benchmark equity indexes experienced a downturn as traders scrutinized the latest batch of corporate earnings reports, reflecting investor sentiment adjusting to economic realities. The S&P 500 index dipped by 0.2%, settling at 5,555.7. Meanwhile, the Dow Jones Industrial Average and the Nasdaq Composite each saw a minor decline of 0.1%, closing at 40,358.1 and 17,997.4, respectively.
Among the sectors, energy led the losses, while materials showed resilience, emerging as the top gainers in the volatile market environment. In the realm of corporate announcements, United Parcel Service, commonly referred to as UPS, reported disappointing second-quarter results that fell short of analyst projections.
This prompted the company to temper its full-year revenue expectations, forecasting that US customers will likely continue to opt for more economical service tiers. In response to this news, UPS's shares plummeted by an alarming 12%, marking the steepest decline on the S&P 500 for the day. Paccar, a significant player in the truck manufacturing sector, suffered from a substantial drop as well, emerging as the least favorable stock on the Nasdaq and the second worst performer on the S&P 500.
The company's year-over-year results showed a decline of nearly 11%, indicating rising challenges in its operational environment and contributing to investor trepidation. General Motors, another industry giant, announced a delay in the launch of the Buick brand's inaugural electric vehicle. Moreover, the company revealed that it would postpone the reopening of its electric truck battery plant located in the US, citing ongoing challenges in the Chinese market as part of the rationale for these delays.
Despite these setbacks, General Motors raised its full-year earnings forecast following a better-than-expected second-quarter performance, though its shares still slid by 6.4%, reflecting investor concerns. On a brighter note, Spotify Technology reported a significant swing to a higher-than-anticipated profit for the second quarter, largely driven by an impressive uptick in premium subscription growth that exceeded analyst estimates.
Following this announcement, shares of Spotify surged nearly 12%, showcasing investor enthusiasm amidst the broader market volatility. From a bond market perspective, the US two-year yield decreased by 2.8 basis points to 4.49%, while the 10-year yield saw a minor loss of one basis point, settling at 4.25%.
These movements in yield reflect the ongoing adjustments in investor expectations regarding monetary policy and economic growth. In economic news, existing home sales in the US decreased over the last month, even as home prices reached new record highs. The increase in inventory levels, now at the highest point in over four years, suggests a potential stabilization in the housing market, which was highlighted in recent data published by the National Association of Realtors. Manufacturing activity in the Mid-Atlantic US region has also been reported to have unexpectedly slid into a deeper contraction territory this month, following a decline in shipments and orders, according to data released by the Federal Reserve Bank of Richmond. West Texas Intermediate crude oil witnessed a 1.4% drop, bringing prices down to $77.28 per barrel, reflecting ongoing fluctuations in global oil markets. In a significant political development over the weekend, President Joe Biden announced his withdrawal from the presidential race and subsequently endorsed Vice President Kamala Harris as the Democratic Party's nominee for the upcoming election.
This unexpected change has stirred the political landscape, with market participants expressing mixed views on how this may influence Federal Reserve policy. Stifel highlighted in a client note that some traders might perceive increased uncertainty as an impetus for more aggressive Fed action, while others argue that the heightened political instability could lead the Federal Open Market Committee to adopt a more cautious stance to maintain an apolitical image. The precious metals market witnessed gains as well, with gold prices rising by 0.5% to hit $2,406.60 per troy ounce, while silver climbed by 0.2%, reaching $29.37 per ounce.
Such increases often reflect a flight to safety amid market uncertainties and potential economic turbulence..