The major domestic equity indexes chalked up modest gains on Tuesday after holding near the unchanged mark for much of the session. Driving what was a mundane session the depreciating enthusiasm over the U.S.-China trade truce.
At the same time, the U.S. threatened tariffs on additional European goods. Washington’s proposed tariffs on $4 billion worth of European Union goods in an extended dispute over aircraft subsidies came just as trade tensions with China seemed to be easing.
Nonetheless the equity markets rallied to send the S&P 500 index to a record for a second straight session. The S&P 500 had rallied nearly 7% in June on hopes the two largest economies in the world would find a way to end their trade war.
With U.S. and global economic data showing signs of slowing, the focus for investors will now turn to monetary policy and the upcoming earnings season.
The softening data triggered a decline of about 3% in crude oil prices despite an agreement among oil producers to extend supply cuts. The result was a drop of 1.74% in the energy sector index. The defensive real estate index was up 1.82% and the utilities sector index gained 1.24%. The latter two were the best performers of the day.
Exxon and Chevron fell more than 1% each, while Apache was down more than 6%.
Cleveland Fed President Loretta Mester expressed skepticism that an interest rate cut is the right move until there are more signs the economy is moving to a truly weaker path.
Nonetheless, the Street is still expecting the Fed to cut interest rates at its July 30-31 policy meeting, despite the latest developments in trade talks.
ADP lost 2.66%, pressuring the tech-heavy Nasdaq, after market sources said brokerage Jefferies is re-offering 8 million of the company’s shares at a discount.
L3Harris Technologies gained 4.28%, making it the best performer on the S&P 500, after Jefferies added the defense contractor to its top picks for aerospace and defense electronics for the second half of 2019.
Attention is now being focused on the monthly jobs report on Friday, which is expected to show the private sector added 160,000 jobs in June, after May’s sharp slowdown in jobs growth.
Approximately 6.36 billion shares changed hands on the major domestic equity exchanges, as compared to the 7.02 billion share daily average over the past 20 trading days.