The rally that pushed the stock market closer to an all-time high lost steam on Tuesday as traders waded through a mixed batch of corporate earnings and economic figures.
(Bloomberg) — The rally that pushed the stock market closer to an all-time high lost steam on Tuesday as traders waded through a mixed batch of corporate earnings and economic figures.
Just a few days ahead of the all-important jobs report, data suggested some softening in demand for workers in a still tight labor market. The numbers weren’t enough to entice investors after the S&P 500 notched its longest monthly winning run in almost two years. To Marko Kolanovic at JPMorgan Chase & Co., equity valuations are so lofty that they imply continued expansion, or “no landing,” and simultaneous monetary easing.
“We remain skeptical of this outcome, anticipating the inflation decline to prove incomplete, leaving restrictive policies in place that should increase private sector vulnerabilities and end the global expansion,” JPMorgan’s chief global markets strategist wrote.
The S&P 500 dropped from a 16-month high. Uber Technologies Inc. slid amid concern on whether it can maintain the pace of growth in its ride-hailing and delivery business. Caterpillar Inc. rose to a record on solid earnings, while Advanced Micro Devices Inc. climbed before its results. Bonds fell, with the 30-year yield hitting the highest since November as the Treasury prepares to ramp up issuance of longer-dated securities.
‘World of Uncertainty’
“With limited news, the catalyst is not fundamentals, but technicals, according to Andrew Brenner at NatAlliance Securities, referring to the surge in long-bond yields. “We warned that the next risk of the market is the yield curve risk. Welcome to the world of uncertainty and bad positioning.”
When it comes to positioning in equities, though, Bank of America Corp. strategist Savita Subramanian noted there’s no reason to fret just yet even as everyone piles in.
BofA’s Sell Side Indicator — which tracks sell-side strategists’ recommended stock allocations — is still in neutral territory despite increased allocations and stands closer to a “buy” rather than a “sell” signal.
“Rising equity allocations and falling bond allocations mark a reversal from the bond love and equity hate that built during 2022,” Subramanian added.
In other corporate news, Tesla Inc. slipped amid news it’s the subject of another probe by US regulators, this time focusing on driver complaints about vehicles possibly at risk of losing control of steering. JetBlue Airways Corp. slid after slashing its full-year profit forecast over signs of a slowdown in domestic demand. Norwegian Cruise Line Holdings Ltd. tumbled as the company issued guidance that missed Wall Street’s expectations.
Key events this week:
- China Caixin Services PMI, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Thursday
- Bank of England rate decision, Thursday
- US initial jobless claims, productivity, factory orders, ISM Services, Thursday
- Eurozone retail sales, Friday
- US unemployment rate, non-farm payrolls, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.2% as of 2:27 p.m. New York time
- The Nasdaq 100 fell 0.1%
- The Dow Jones Industrial Average rose 0.2%
- The MSCI World index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index rose 0.6%
- The euro fell 0.2% to $1.0971
- The British pound fell 0.5% to $1.2766
- The Japanese yen fell 0.7% to 143.32 per dollar
Cryptocurrencies
- Bitcoin fell 0.3% to $29,105.66
- Ether fell 0.6% to $1,841.9
Bonds
- The yield on 10-year Treasuries advanced eight basis points to 4.04%
- Germany’s 10-year yield advanced six basis points to 2.56%
- Britain’s 10-year yield advanced nine basis points to 4.40%
Commodities
- West Texas Intermediate crude fell 0.4% to $81.45 a barrel
- Gold futures fell 1.3% to $1,982.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott, Richard Henderson and John Viljoen.
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