The deceleration of bank shares is causing the Dow to stagnate.
Wall Street is gradually recovering from its recent setbacks, but at a slower pace than the day prior. The Dow is being held back by losses in the banking sector. Crucial inflation figures are set to be released later in the week.
Investors had a somewhat guarded approach to stock buying on Tuesday. The Dow Jones Industrial Average, comprising prestigious companies, dropped 0.2 percent to end at 40,736 points. Contrarily, the tech-centric Nasdaq recorded a 0.8 percent rise to 17,025 points, while the S&P 500 increased 0.4 percent to 5,495 points. All three indices had managed to rebound from their earlier losses and secured gains of over one percent each on Monday.
Investors are anticipating the August inflation rate, which is projected to decline marginally to 2.6 percent year-on-year. As per Erik Knutzen, investment strategist at Neuberger Berman, if the inflation data surpasses expectations, it could spark concerns, and if it falls short, the markets may respond negatively due to augmented fears of a recession. The producer price index figures are due to be revealed on Thursday. Additionally, overnight to Wednesday (MEZ), the first television debate between the US Vice President Kamala Harris and ex-President Donald Trump is set to take place.
The market might remain within a specific range or exhibit a minor negative trend until the third-quarter earnings season. This is according to Oliver Pursche, advisor at Wealthspire Advisors in New York. "September is typically problematic, and currently, there's no significant news to propel stock prices further," he added, referring to the gains already garnered this year.
Apple faces financial setback
Individual stocks gained prominence, with Apple being a major talking point. The US company ended up losing its court battle over billions in back taxes. The European Court of Justice (ECJ) ruled that Apple must return 13 billion euros in unlawful tax benefits to Ireland. The stock's value dropped by 0.4 percent as a consequence. Additionally, Huawei managed to outshine Apple following the introduction of a triple-foldable smartphone shortly after Apple's iPhone presentation. Huawei reported around 3.6 million pre-orders for their "Mate XT" device.
Tesla maintains momentum
On the rise were Tesla shares. The pioneer of electric vehicles saw its stock grow by 4.6 percent, leading gains among growth stocks. The EU Commission is considering lowering the controversial antidumping taxes on electric vehicles produced in China by Tesla and several Chinese manufacturers. According to EU Commission documents, the additional tax for Tesla will be reduced to 7.8 percent from the previous 9 percent.
Investors show interest in Oracle
Oracle shares recorded significant gains after the company reported quarterly results exceeding market expectations, primarily due to swift development in cloud services.
Banks' stocks lose favor
Shares of US banks JPMorgan and Goldman Sachs were rejected by investors. Dividend stocks of these banks fell by 5.2 percent and 4.4 percent respectively, attributed to cautious projections from these institutions regarding their expectations for the upcoming year. Additionally, market participants reacted negatively to a speech by Fed Vice-Chair Michael Barr regarding future capital requirements for banks. The proposed 19 percent increase in capital requirements under the final Basel III rules will now only escalate by 9 percent, according to Barr's announcement. This may lessen capital requirements for the largest US banks, but not as substantially as initially projected.
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The drop in the Dow Jones Industrial Average on Tuesday might have been influenced by losses in the banking sector, affecting share prices of companies like JPMorgan and Goldman Sachs. Despite the anticipated August inflation rate potentially causing market concerns or negativity if it falls short of expectations, some tech stocks, such as Tesla, continued to perform well, with its shares growing by 4.6%.
