On Tuesday, the US benchmark equity indexes displayed a mixed performance as traders eagerly anticipated the official consumer inflation data for the month of August. The Nasdaq Composite showed resilience, climbing by 0.8% to settle at 17,025.9, while the S&P 500 exhibited a modest uptick of 0.5%, reaching 5,495.5.
In contrast, the Dow Jones Industrial Average experienced a slight hiccup, declining by 0.2% to 40,737. Notably, the real estate sector emerged as the frontrunner among the gainers, whereas energy stocks faced significant retractions. On the economic front, datasets released by the government are expected to reveal an uptick in US consumer inflation by 0.2% month-over-month and an annual increase of 2.6% for the previous month, as indicated by a consensus compiled by Bloomberg.
This underscores a pivotal moment for investors as they evaluate the implications of these inflationary pressures. Currently, market sentiments reflect a 69% probability that the Federal Reserve's monetary policy committee will implement a 25 basis points cut to its benchmark lending rate in the forthcoming week, as observed through the CME FedWatch tool.
Financial analysts at Saxo Bank elaborated in a Tuesday client note, stating, "A downside surprise in inflation could lead to a more aggressive 50-basis-point rate cut in September, prompting markets to anticipate larger cuts in the future." They cautioned, however, that persistently elevated inflation rates or a rebound could temper expectations for future reductions, especially with the looming election cycle and potential fiscal expenditures on the horizon. Looking ahead, the official producer prices report for August is set to be unveiled on Thursday, an event that market participants will be keenly watching. In a reflection of the overall business climate, small business optimism in the US has shown signs of weakening, attributed predominantly to diminished expectations regarding sales volumes.
The latest survey from the National Federation of Independent Business highlighted inflation as the foremost concern for small business owners, signaling challenges that lie ahead in maintaining a robust economic environment. On the bond markets, the US two-year yield dipped by 6.3 basis points, settling at 3.60%, while the 10-year rate decreased by 5.5 basis points to reach 3.64%.
This movement in yields is indicative of the shifting market sentiment as investors recalibrate their expectations in light of potential rate changes. In commodity news, West Texas Intermediate crude oil took a hit, slumping 3.6% to $66.22 per barrel. This decline followed the Organization of the Petroleum Exporting Countries' (OPEC) revision of its global oil demand projections for 2024 and 2025, underscoring the volatility in energy markets. Turning to company-specific developments, Oracle Corporation ($ORCL) saw its shares surge by an impressive 11%, making it the standout performer on the S&P 500.
The software powerhouse released its fiscal Q1 results late Monday, surpassing Wall Street estimates, driven by robust performance in its cloud segments. Furthermore, in a strategic partnership, Oracle announced a new offering in collaboration with Amazon.com ($AMZN) for its Amazon Web Services, allowing customers to leverage Oracle Autonomous Database on dedicated infrastructure, alongside Oracle Exadata Database Service within Amazon's cloud ecosystem.
This collaboration resulted in a 2.4% uptick for Amazon shares on Tuesday, marking it as the top gainer on the Dow. Conversely, JPMorgan Chase & Co. ($JPM) expressed concerns regarding the Street's net interest income consensus for 2025, deeming it overly optimistic in light of the anticipated interest rate cuts expected at the Federal Reserve’s upcoming monetary policy meeting next week.
This sentiment contributed to a 5.2% decline in JPMorgan's shares, making it the worst performer on both the Dow and S&P 500. Meanwhile, Hewlett Packard Enterprise Co. ($HPE) was not immune to the market's shakes, experiencing a significant decline of 8.5%. The company announced a public offering of $1.35 billion worth of its series C mandatory convertible preferred shares late Monday, casting a shadow over its stock performance. In precious metals, gold prices saw a modest increase of 0.5%, reaching $2,546 per troy ounce, while silver prices also received a slight boost, climbing 0.4% to $28.75 per ounce, reflecting the safe-haven demand amidst economic uncertainty..