Wall Street’s recent rally fades

 

The Dow Jones Industrial Average and the S&P 500 slid on Tuesday as a recent rally on Wall Street lost steam.

The 30-stock Dow slid 79.88 points, or 0.22 per cent, to close at 36,124.56. The S&P 500 inched lower by 0.06 per cent to 4,567.18. The Nasdaq Composite gained 0.31 per cent to end at 14,229.91 as technology shares outperformed.

GitLab jumped 11.5 per cent after the open-source software development platform beat quarterly financial expectations and issued strong guidance for the current quarter. Nio climbed 1.5 per cent after the Chinese electric vehicle maker reported narrowing losses in the third quarter.

Tuesday’s moves follow Monday’s losing session for all three indexes, which called into question whether the market had run up too far too fast. Monday’s pullback came on the heels of five consecutive positive weeks for the three averages.

Despite their recent performance, the three indexes are still up on the quarter and year. That underscores the strength of the market’s rally leading up to the current trading week.

Stocks came off session lows on Tuesday as the U.S. 10-year Treasury yield fell below the key 4.2 per cent level. The move came on the back data signalling cooling in the labour market.

In US sector news, Technology shares were boosted in particular following the data, pushing the Nasdaq into positive territory for the session. Notably, mega-cap tech stocks Apple and Nvidia each added more than 2 per cent. Energy was the worst performer.

The Russell 2000 fell more than 1 per cent on Tuesday, reversing course after bucking the downtrend on Monday. Still, the small-cap index has jumped more than 5 per cent over the past month, raising hopes of a broadening market rally and interest rate cuts from the Federal Reserve on the horizon.

Shifting to the Australian landscape, a sharp decrease in coal and LNG exports has led to Australia experiencing a balance of payments deficit, which is expected to drive the annual economic growth rate below 2 percent for the first time since the pandemic recession in 2020.

Economists are revising their forecasts for the September-quarter national accounts, with expectations of a 0.5 percent expansion. If this outcome aligns with expectations, it would result in the annual GDP growth rate dropping to 1.9 percent, marking the first time GDP has expanded by less than 2 percent annually since the onset of the pandemic in 2020.

Futures

The SPI futures are pointing to a 0.4 per cent gain.

Currency

One Australian dollar at 8:50 AM was buying 65.51 US cents.

Commodities

Gold has lost 0.21 per cent. Silver has lost 1.57 per cent. Copper has lost 1.29 per cent. Oil has fallen 1.26 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE lost 0.31 per cent, Frankfurt gained 0.78 per cent, and Paris closed 0.74 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei fell 1.37 per cent, Hong Kong’s Hang Seng lost 1.91 per cent while China’s Shanghai Composite closed 1.67 per cent lower.

The Australian share market closed 0.89 per cent lower at 7,061.55.
 
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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