On Tuesday, U.S. stocks closed lower as a combination of mixed economic data, weak corporate results, and ongoing debt ceiling negotiations in Washington affected investor risk appetite. While all major stock indexes ended down, the tech-heavy Nasdaq’s losses were mitigated by strong performances from mega-cap tech companies like Amazon.com, Alphabet Inc, and Microsoft Corp.
President Joe Biden and House of Representatives Speaker Kevin McCarthy met to discuss raising the U.S. debt ceiling and avoid a potential default before the looming deadline. However, doubts remained about whether a full deal or just a temporary extension would be reached in time. These negotiations occurring in the public sphere contributed to increased market volatility until an agreement was reached.
Home Depot, the largest U.S. home improvement chain, reported disappointing results, adding to investor concerns. Additionally, weaker-than-expected retail sales data suggested a potential loss of momentum in consumer spending due to restrictive monetary policies dampening demand. However, a core measure of retail sales indicated that the American consumer continues to support the economy.
Despite the cautious outlook for the year, consumer spending remained relatively robust during the first quarter, and corporate profits were not as dire as anticipated. However, uncertainties persisted, and it was clear that challenges remained. The Dow Jones Industrial Average fell by 1.01%, losing 336.46 points to reach 33,012.14. The S&P 500 declined by 0.64% (26.38 points) to settle at 4,109.9, while the Nasdaq Composite dropped 0.18% (22.16 points) to close at 12,343.05.
European shares also ended lower, influenced by downbeat earnings and weak U.S. retail sales data, which raised concerns about consumer spending. The pan-European STOXX 600 index lost 0.42%, while MSCI’s global stocks gauge shed 0.54%. In contrast, emerging market stocks rose slightly by 0.05%, and Japan’s Nikkei index experienced a 0.73% increase.
U.S. Treasury yields continued to rise following positive economic data, indicating economic resilience despite the Federal Reserve’s restrictive policy. Benchmark 10-year notes experienced a decline of 7/32 in price, resulting in a yield of 3.5339%. The 30-year bond also fell, leading to a yield of 3.8601%. The U.S. dollar strengthened slightly against a basket of world currencies as attention turned to the debt ceiling negotiations in Washington. The dollar index rose by 0.2%, while the euro declined by 0.1% to $1.0861. The Japanese yen weakened by 0.14% against the dollar at a rate of 136.32 per dollar, and sterling was trading at $1.2482, reflecting a 0.36% decrease. Oil prices dipped due to weaker-than-expected economic data from both the United States and China, which contradicted a higher global demand forecast by the International Energy Agency (IEA). U.S. crude settled at $70.86 per barrel, down 0.35%, while Brent settled at $74.91 per barrel, experiencing a 0.43% decline.
