Fears over global growth and escalating war in the Middle East weigh on sentiments
U.S. stocks declined for the third straight session on Tuesday, 23 September 2014 as fears over global growth and escalating war in the Middle East sent investors scrambling for havens like U.S. Treasurys. Equity indices were pressured from the start following some overnight developments that weighed on sentiment. The market tried to overcome the early weakness, but could not stage a sustained rebound, which resulted in follow-through selling in the afternoon.
The Dow Jones Industrial Average shed 116.68 points, or 0.7%, to 17,056.00. The Nasdaq Composite dropped 19 points, or 0.4%, to 4,508.69. The S&P 500 closed 11.52 points, or 0.6%, lower at 1,982.77.
Eight out of ten sectors ended lower led by healthcare, industrial and consumer staples sectors.
Sentiment was hit by weak European data, which overshadowed better-than-expected Chinese manufacturing numbers. Equities in Europe were particularly hard hit, while the 10-year Treasury note yield fell 3 basis points to 2.53%.
There was risk aversion back in the market place on Tuesday following reports overnight that U.S. airstrikes hit the ISIS terrorists at several locations in Iraq and Syria. Arab U.S. allies in the region also helped the U.S. cause, reports said. Meantime, there were also reports that Israel shot down a Syrian jet that entered its air space.
In other news overnight, the preliminary HSBC China manufacturing purchasing managers index (PMI) rose to 50.5 in September versus the final reading of 50.2 in August. That news was considered by the market place to be better than expected but only modestly supported stock markets in Asia overnight. The China news is a mildly bullish underlying factor for the beaten-down raw commodity sector.
The European Union's Markit composite PMI disappointed Tuesday as it came in at 52.3 in September versus 52.5 in July and was the lowest reading this year. That news helped to sink European stocks. The news supports the notions that EU monetary policy will continue to be eased, while at the same time the U.S. Federal Reserve continues to ratchet in its heretofore very accommodative monetary policy.
U.S. economic data released Tuesday showed that the July Housing Price Index from the FHFA, rose 0.1% to follow a revised increase of 0.3% (from 0.4%) observed during the prior month. he flash reading of U.S. manufacturing conditions was unchanged in September, keeping the index at a 52-month high, according to data released by Markit on Tuesday.
Among stocks under focus, Dow component Pfizer narrowed its loss to 0.4% by the close. The stock received an afternoon boost after reports the company has approached Actavis about a potential acquisition.
Apple did some heavy lifting, while other influential names like Facebook and Google ended mixed.
Gold prices gained ground building on the prior session's moderate advance, while silver moved off of multiyear lows on Tuesday, 23 September 2014 at Comex but well down from the highs scored in overnight trading. Events in the Middle East curtailed investor risk appetite which prompted some safe-haven demand and short covering to be featured in gold. However, the gains in gold were eroded as the session progressed, due in part to the U.S. dollar index sharply paring its solid early losses.
Gold for December delivery rose $4.10, or 0.3%, to settle at $1,222 an ounce. December silver reversed losses and edged up a penny to $17.71 an ounce.
Crude oil futures bounced back on Tuesday, 23 September 2014 at Nymex ahead of weekly supply reports, while London's Brent crude traded lower on concerns about the eurozone's economy. Light, sweet crude futures for delivery in November rose 69 cents, or 0.8%, to settle at $91.56 a barrel.
Today's participation was ahead of recent averages with roughly 700 million shares changing hands at the NYSE floor.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while New Home Sales for August (consensus 435K) will cross the wires at 10:00 ET.
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