New round of sanctions against Russia impact momentum
U.S. stocks ended Tuesday's choppy trading session lower on 29 July 2014, as investors turned cautious after the European Union and the President Barack Obama announced a new round of sanctions against Russia for its role in Ukraine's deadly civil war. The expanded sanctions will target the Russian energy, defense, and finance sectors.
Better-than-expected earnings and upbeat consumer confidence data sent the Dow Jones Industrial Average above 17,000 and the S&P 500 near its record closing level, but gains soon petered out.
The Dow Jones Industrial Average ended 70.48 points, or 0.4%, lower at 16,912. The Nasdaq Composite finished 2.2 points lower at 4,442.70. The S&P 500 closed 9 points, or 0.5%, lower at 1,969.95.
Nine of ten sectors registered losses with the industrial sectors leading the pack.
Once again, market participants were focused on quarterly reports in the early going, but geopolitical worries overshadowed the impact of mostly better than expected earnings. Specifically, equities retreated after it was reported that European EU officials have prepared the new set of sanctions against Russia.
The industrial sector was pressured by transport stocks after UPS reported disappointing results and guided lower.
There were geopolitical rumblings impacting trading on Tuesday. The European Union and U.S. are slapping new sanctions on Russia. Meantime, the Israel-Hamas conflict appears not to be de-escalating. These matters helped to pressure world stock markets overnight. Meantime, U.S. Treasury bond prices posted a contract high and the U.S. dollar index hit a 5.5-month high on Tuesday.
The market place is also focused on the big slate of U.S. economic data on tap this week. The headliners include the Federal Reserve's Open Market Committee (FOMC) meeting on Tuesday and Wednesday, and the key U.S. employment report on Friday. The U.S. second-quarter GDP report is also out on Wednesday. It's likely the aforementioned reports will have a significant price impact on many markets, in the immediate aftermath of their release times.
The Conference Board announced that consumer confidence index climbed to 90.9 in July from 86.4 in June, marking the highest level since October 2007. Market had expected the index to slip to 85.0.
Separately, a report from the Case-Shiller 20-city composite index showed U.S. house prices rose in May, with every city showing gains. Prices fell on a seasonally adjusted basis, however. Year-over-year growth also slowed down.
Data released on Monday showed pending U.S. homes sales fell 1.1% in June, the first decline in four months.
Bullion prices witnessed mixed finish on Tuesday, 29 July 2014. Gold prices retreated on Tuesday to settle below $1,300 as better-than-expected U.S. economic data bolstered expectations of a tighter monetary policy from the Federal Reserve.
Gold for August delivery dropped $5, or 0.4%, to $1,298.30 an ounce. September silver fared better, edging up 2 cents, or 0.1%, to $20.58 an ounce.
Crude oil prices dropped at Nymex on Tuesday, 29 July 2014 as investors saw oversupply in the market.
September crude oil extended Monday's losses as the stronger dollar index weighed on prices. The energy component spent its entire floor session in the red, trading as low as $100.32 per barrel. Unable to gain buying support, it settled at $100.91 per barrel, or 0.8% lower.
Participation was on the light side with 615 million shares changing hands at the NYSE.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while the ADP Employment Change for July (consensus 215K) will be reported at 8:15 ET. The advance reading of Q2 GDP will be released at 8:30 ET (consensus 3.2%), while the FOMC will reveal its latest policy statement at 14:00 ET.
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