US stocks trade mixed after volatile session amid strong retail earnings and conflicting economic data
- US stocks ended mixed on Tuesday after strong earnings from Walmart and Home Depot.
- US housing starts slipped, while industrial production rose, and the New York Fed's manufacturing gauge eased.
US stocks closed a volatile session in mixed territory Tuesday as traders digested retail earnings and economic data.
Both Home Depot and Walmart reported earnings that beat expectations, with Target and Lowe's slated to report on Wednesday.
But economic data sent conflicting signals. US housing starts in July dropped from the prior month, falling short of consensus expectations. Meanwhile, industrial production rose, and the New York Fed's manufacturing gauge eased.
Here's where US indexes stood as the market closed 4:00 p.m. on Tuesday:
- S&P 500: 4,305.20, up 0.19%
- Dow Jones Industrial Average: 34,151.88, up 0.71% (239.44 points)
- Nasdaq Composite: 13,102.55, down 0.19%
According to Fitch, the odds of a severe housing downturn have climbed, and home prices could sink as much as 15% in that scenario. But the ratings agency said a moderate downturn remains the most likely outcome.
S&P 500 industrial and consumer stocks are set to take the biggest hit from higher labor costs, according to Goldman Sachs. A further acceleration in US wage growth would put pressure on the sector and reduce industrials' per-share earnings by 1.4%, analysts said.
For the next leg of the stock rally, Jefferies recommends investors to look to small-cap and cyclical stocks. The Russell 2000 index of small-cap stocks has surged 22% since mid-June, and the firm expects the rebound to carry on.
Meanwhile, Saudi Arabia has piled into big-cap US stocks like Alphabet, Microsoft, and Amazon amid a $7.5 billion spending spree stemming from its oil profits. The kingdom's sovereign wealth fund also bought shares of finance names like JPMorgan and BlackRock.
Overseas, Germany moved to postpone the closure of its remaining three nuclear power plants amid a worsening European energy crisis. The plants had been scheduled to shutter December 31, but Russia's natural gas supply cuts have opened the door to an extension.
At the same, Germany inked a deal with natural gas suppliers to keep LNG terminals stocked through winter. The new agreement will provide some relief ahead of more potential supply snags.
And in the digital asset space, the amount stolen in crypto heists is up 60%, according to Chainalysis. The firm estimates hackers have swiped $1.9 billion between January to July this year.
Oil plunged, with West Texas Intermediate down 3.44% to $86.33 a barrel. Brent crude, the international benchmark, dipped 3.25% to $92.01 a barrel. Positive signals on Iran nuclear talks raised the prospects of a supply influx.
Gold edged lower 0.37% to $1,791.50 per ounce. The 10-year yield rose 2.4 basis points to 2.815%.
Bitcoin fell 0.63% to $23,893.01.
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