US stocks almost tumble Tuesday, Nasdaq hits new high after ISM services gauge slump

Financials and energy stocks were the most important U.S. stocks on Tuesday as the Nasdaq peaked again, the Dow Jones Industrial Average and S&P 500 fell from record highs, and bond yields and prices of the oil fell. He fell, and he fell the most.

Investors continued to monitor oil prices, but hit a six-year high as talks between OPEC and its allies failed to reach agreement on a proposal to increase production in the months to come.

What are the main benchmarks doing?
  • Dow Jones Industrial Average
    DJIA,
    + 1.30%

    It fell 208.98 points (0.6%) to 34,577.37.

  • S&P 500
    SPX,
    + 1.13%

    It fell 8.8 points (0.2%) to 4,343.54, ending the 7-day winning streak.

  • Nasdaq Composite Index
    COMP,
    + 0.98%

    Late afternoon trading rose 24.32 points to a record 14,663.64, up 0.2%.

The US market closed on Monday in accordance with Independence Day, which fell on Sunday. On Friday, the S&P 500 closed the seven longest consecutive records since 1997, with the Nasdaq Composite and the Dow also setting records.

What drove the market?

Although supply chain bottlenecks are seen as a slowdown in the recovery, stock prices almost retreated on Tuesday after investors pushed the market to a new high in recent weeks as the economy is getting stronger.

The Institute for Supply Management on Tuesday released the purchasing managers index for the service sector. It fell to 60.1% in June from May to a record 64%. Readings above 50% indicate an increase in activity. IHS Markit’s final service PMI in June fell from 70.4 in May to 64.6.

“The drop in the ISM services index in June suggests that shortages and rising prices are hampering employment and economic activity,” said Michael Pierce, senior US economist at Capital Economics. ..

Investors on the strength of the economic recovery due to a more than expected drop in the ISM services index, although results are still “strong”, according to Michael Alone, chief investment strategist at State Street Global Advisors US SPDR. Concerns are growing. “By asking the question. Is it past the peak of the pandemic in terms of economic recovery? He said in an interview on Tuesday.

Lily: What to expect if the ‘peak of everything’ is already happening and the market is feeling gravity again

Arone expects investors to focus on “what executives have to say about the future” when discussing second quarter performance in the coming weeks. Meanwhile, he said the stock market suspension was “healthy,” adding that he expects stocks to continue rising this year.

Brian Walsh Jr., financial advisor to Walsh & Nicholson, a wealth manager based in Wayne, Pa., Said stocks in the short term due to low interest rates and stagnant consumer demand after a pandemic kept people at home for a long time. He said he should continue to benefit from it. In a telephone interview with the financial group on Tuesday. Inflation was Walsh’s biggest concern, and he said he noticed a significant increase in restaurant prices when he traveled to the “crowded” Jersey Shore on the July 4th bank holiday weekend.

“It was beyond the pre-pandemic,” Walsh said of the crowds he observed. “It was full of people.”

According to Walsh, Walsh & Nicholson Financial Group, which oversees roughly $ 1 billion in assets, prefers high-quality stocks with strong cash flow to deal with rising inflation. “We have a firm commitment to high quality and paying dividends,” he said. Walsh is afraid of a high valuation, avoiding adding money to growth stocks, and an evenly weighted approach to investing in S&P 500 index stocks to avoid high exposure. to technology. He adds that he supports.

Walsh Highlighted Invesco S&P 500 Equal Weight ETF
RER,
+ 1.42%

As an example of this strategy. Exchange-traded funds rose about 18.3% through Tuesday, according to FactSet. That’s what FactSet data shows, compared to the year-to-date profit of the S&P 500, whose largest sector exposure is information technology, at around 15.6. %.

Meanwhile, US Treasury prices rose, pushing yields lower, and benchmark 10-year Treasury rates fell below 1.40%. Lower yields can benefit interest-sensitive technologies and other growth stocks, but devalue stocks of banks that tend to benefit from higher long-term interest rates. Goldman Sachs
SG,
+ 3.57%

And JP Morgan
JPM,
+ 3.20%

Both have fallen.

Despite the fall of the S&P 500 and the Dow, the highly technical Nasdaq hit a record high on Tuesday. Analysts said the general backdrop remained positive at the start of the second half of this year.

“Risk sentiment remains positive in the second half of the second quarter after a positive end. ThinkMarkets analyst Fawad Razaqzada said in a note that the S&P 500 and other US indices remain positive. Repeated records and investors were ready to buy any drop in the market.

You have to know: Here’s what can turn a stock “breather” into a bigger solution:

The acceleration of COVID-19 vaccination and central bank stimulus packages around the world will lead to strong economic growth, as the Federal Reserve and other central banks say the rise in price pressures is temporary. We think he contributes to it. A phenomenon caused by supply chain bottlenecks, he said.

According to the company’s founder, chief investment officer and chief investment officer, Mark Yusco, Morgan Creek Capital Management has “short-term exposure to equities” due to concerns that the market will focus on technology. We are taking advantage of growth stocks while progressing “moderately”. Officer. Yusco informed MarketWatch on Tuesday of the rise in stock prices of some tech stocks, such as Nvidia Corp.
NVDA,
+ 0.74%,
Even though they are a good company, in his opinion that is overkill.

See also below. Is the market price “maximum growth”? These charts suggest it, according to top strategists

Meanwhile, oil prices have regained attention and oil benchmarks have retreated after hitting levels last seen in 2014.
CLC,
+ 1.43%

Reduced energy stock.

Talks canceled on Monday The United Arab Emirates joined their call to increase the baseline used to determine their production levels and opposed plans to extend the framework of existing supply reduction programs from April 2022 to the end of next year. back.

What company has the focus been on?
  • Popular meme stock AMC Entertainment Holdings Co., Ltd.
    AMC,
    -3.65%

    It fell 3.9% after the movie chain said so. No longer seek shareholder approval to sell more shares.

  • Part of the China Ride Haling app Have I got
    HAVE I GOT,
    + 7.31%

    Decrease of around 19.6% after cyberspace management prevented new users from logging into DiDi’s Ride Hailing app.

  • Complete alliance
    YMM,
    + 5.35%

    The share price fell 6.7%, Kanzhun Ltd.
    BZ,
    + 15.93%

    Application was also restricted, resulting in a 16% drop in market share. Existing users of the application can continue to use the service.

  • Nextdoor Inc. It will be released as announced by a local network company on Tuesday. Merger agreement With a special acquisition company Khosla Ventures Acquisition Co. II
    KVSB,

    In a deal that values ​​the merged company at around $ 4.3 billion. KVSB shares jumped 16%.

  • Amazon
    AMZN,
    -0.32%

    After that, it rose 4.7% and set a new record. Pentagon canceled $ 10 billion that JEDI can sign Microsoft
    MSFT,
    + 0.19%..
    Instead, the department has launched a new contract and is looking for suggestions from Amazon and Microsoft.

How were other markets negotiated?
  • 10-year government bond yield
    TMUBMUSD10Y,
    1.359%

    It fell 6.5 basis points to 1.369%, the biggest one-day drop since June 4. The yields and prices of debt move in opposite directions.

  • ICE USD Index
    DXY,
    -0.34%,
    Currency readings for the baskets of the top six rivals rose 0.3%.

  • American oil benchmark
    CL00,
    + 2.32%

    The New York Mercantile Exchange closed at $ 73.37 a barrel, down 2.4%. Gold futures
    GC00,
    + 0.47%

    It rose 0.6% to $ 1,794.20 an ounce.

  • European stocks fell on the FTSE 100 in London.
    UKX,
    + 1.30%

    Europe 600 Equity Index, down 0.9%
    SXXP,
    + 1.34%

    It will be reduced by 0.5%.

  • In Asia, Shanghai Composite
    SHCOMP,
    -0.04%

    Hong Kong’s Hang Seng index fell 0.1%
    HSI,
    + 0.70%

    Japan’s Nikkei 225 fell 0.3%
    NIK,
    -0.63%

    It increased by 0.2%.

US stocks almost tumble Tuesday, Nasdaq hits new high after ISM services gauge slump

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