In a day marked by significant developments, US benchmark equity indexes concluded Tuesday's trading session on a mixed note, as investors turned their attention to the commencement of the Federal Reserve's two-day monetary policy meeting. A decisive announcement regarding interest rates is anticipated to be released on Wednesday.
The Nasdaq Composite experienced a decline of 1.3%, settling at 17,147.4 points, while the S&P 500 declined by 0.5% to close at 5,436.4. Conversely, the Dow Jones Industrial Average saw a modest uptick, rising by 0.5% to reach 40,743.3 points. The technology sector faced significant selling pressure, suffering a steep decline of 2.2%.
On the other hand, the energy sector emerged as a frontrunner among gainers, reflecting a divergence in sector performance amid broader market volatility. As the Federal Open Market Committee (FOMC) prepares for its pivotal meeting, market expectations are leaning towards maintaining the central bank's benchmark lending rate at its current level, as indicated by the CME FedWatch tool.
Investors remain keenly focused on the FOMC's forthcoming statement and the subsequent press conference led by Fed Chair Jerome Powell. Analysts at Stifel, in a Tuesday memorandum to their clients, stressed that any hints towards a potential rate cut in September will be closely scrutinized. They cautioned that July might be too early for a policy adjustment, and emphasized that compelling evidence from July and August’s inflation data would be required to consider a shift in policy stance. In bond market activity, the yield on the US 10-year note experienced a decrease of 3.2 basis points, settling at 4.14%, while the two-year rate also fell by 2.4 basis points to 4.36%.
This move suggests a cautious approach among investors concerning future monetary policy directions. In the realm of corporate news, pharmaceutical giant Merck ($MRK) notably revised down its earnings guidance for 2024, aiming to account for the financial impact of its recent Eyebiotech acquisition.
Despite raising its revenue midpoint guidance, the company's stock suffered a dramatic drop of 9.8%, marking the steepest decline on both the S&P 500 and the Dow indices. Similarly, Procter & Gamble ($PG), another key player on the Dow, faced challenges as shares fell by 4.8%. While the consumer goods company's earnings reported year-over-year growth during the fiscal fourth quarter, revenues were adversely affected due to foreign-currency fluctuations offsetting pricing and volume advances. CrowdStrike ($CRWD) shares were significantly impacted, plummeting 9.7%, making it the most considerable decline on the Nasdaq and the second-largest drop on the S&P 500.
In a developing story, Delta Air Lines ($DAL) has engaged the services of attorney David Boies in pursuit of potential damages against CrowdStrike and Microsoft ($MSFT) as a result of a recent global tech outage. Microsoft also faced headwinds, with its stock closing down by 0.9%, further adding to the notable underperformance on the Dow. In a shift towards more positive news, PayPal ($PYPL) emerged as the top gainer on the Nasdaq, surging 8.6% following the company’s announcement of stronger-than-expected second-quarter results, alongside an optimistic earnings forecast for 2024.
Additionally, JetBlue Airways ($JBLU) enjoyed a remarkable gain of 12%, fueled by its announcement to defer approximately $3 billion in capital expenditures through 2029, thereby enhancing cash flow and revealing an unexpected profit in the second quarter. Turning to commodities, West Texas Intermediate crude oil prices decreased by 1%, settling at $75.05 per barrel. In the sphere of economic indicators, a government report highlighted a decline in US job openings and quits from the previous month, a situation that analysts from BMO Capital Markets suggested may open the door for a potential rate cut in September.
Concurrently, US consumer confidence experienced a boost this month, driven by stronger expectations, while annual inflation projections remained stable, as reported by the Conference Board. Moreover, US home prices in May reflected a sequential increase comparable to the prior month, although the year-over-year measure exhibited a slowdown, according to data from S&P Global’s division, S&P Dow Jones Indices.
On the commodities front, gold prices appreciated by 1.2% to reach $2,406.60 per troy ounce, whereas silver prices climbed by 2.2%, closing at $28.48 per ounce..