US stocks are reeling
After a three-day rapid decline on US stock markets, optimism returns to Wall Street. The lingering threat of escalation in the Middle East doesn't dampen traders' buying mood. Ride-hailing company Uber is the day's winner, while Apple continues its downward trend.
Following Monday's sell-off, investors on Wall Street cautiously embark on a recovery path. The Dow Jones Industrial Average of blue-chip stocks closed Tuesday 0.8 percent higher at 38,997 points. The tech-heavy Nasdaq advanced one percent to 16,366. The broad-based S&P 500 gained one percent to 5,240.
Fear of an economic downturn had pushed US stock market barometers down by up to around six percent at the start of the week. Many analysts described the reaction of market players as exaggerated. The fear of a US recession had been eased by positive data from the US services sector on Monday afternoon. "We still believe that strong household and corporate balance sheets make a recession unlikely," said Seema Shah, chief strategist at Principal Global Investors. However, she warned, "risks are increasing." Especially an Iranian attack on Israel could bring back panic to the trading floor, warned Jürgen Molnar, strategist at RoboMarkets.
Nevertheless, the Japanese leading index Nikkei made a record jump on Tuesday after suffering its biggest daily loss since the 1987 Black Monday. Especially recession fears in the US and concerns about the unwinding of yen-funded investments triggered the 12.4 percent crash on Monday. This was followed by a similarly steep rise of more than 10 percent. Particularly tech stocks recovered.
Traders snap up Uber and Caterpillar
Among US individual stocks, shares of Uber were in demand, gaining nearly 11 percent. The taxi and delivery service surpassed market expectations in revenue and earnings thanks to stable demand for its services. Investors also stocked up on Caterpillar, with the US construction equipment manufacturer's shares rising more than 3 percent. The company managed to achieve higher prices and outperform expectations in the second quarter.
It also went up for the previously struggling cybersecurity specialist Crowdstrike. The stock climbed more than 4 percent to $231.69 after analysts at investment bank Piper Sandler upgraded it to "overweight" from "neutral." While the extent of Crowdstrike's recent IT blunder is "unprecedented," its impact is expected to be short-lived.
Meanwhile, shares of Apple, the struggling iPhone provider, continued their downward trend, losing around 1 percent. On Monday, they fell nearly 5 percent after Berkshire Hathaway, the investment company of legendary investor Warren Buffett, reduced its stake in the company by nearly 50 percent. The antitrust ruling against Google could be another setback for the company. Apple faces potential billions in lost revenue if Google no longer pays to have its search engine set as the default in the "Safari" browser.
For all further developments of today's trading day, please follow this link.
Despite Apple's continued struggle, with share prices decreasing by around 1%, other tech stocks like Uber and Caterpillar saw significant gains. Uber's share prices surged nearly 11%, driven by robust revenue and earnings, while Caterpillar's share prices rose more than 3%, thanks to strong performance in the second quarter.
