Stock Market Today: Dow Slipped on Pelosi’s Taiwan Visit, BP Surged
The stock market dropped Tuesday as markets monitored House Speaker Nancy Pelosi’s trip to Taiwan and hawkish comments from a Federal Reserve official.
Dow Jones Industrial Average
closed down 402 points, or 1.2%, while the
dropped 0.7%, and the
fell 0.2%. All three indexes wavered between gains and losses throughout the day, before ending lower.
“US stocks went on a rollercoaster ride as traders grew nervous over China’s retaliation over House Speaker Pelosi’s trip to Taiwan [and] a reminder from Fed’s [Mary] Daly that their interest rate hiking cycle is nowhere near done,” wrote Edward Moya, senior market analyst at Oanda.
Pelosi landed on Tuesday in Taiwan, a move that potentially raises tensions between the U.S. and China. That makes the stock market nervous, as trade relations between the two largest economies broke down under President Trump.
Daly, the president of the San Francisco Fed, said that the central bank is nowhere near finished fighting inflation and that the Fed is likely to raise rates and keep them high for a while.
That sentiment is a reversal from what had sent the stock market upward recently.
The S&P 500 had gained 13% from its intraday low of the year hit in mid-June through Monday’s close, as markets bet that the Federal Reserve will slow down the pace of its interest rate hikes as signs emerged that inflation has peaked.
This week, the stock market had already been growing cautious about the Fed—and higher stock prices—ahead of key economic data. If Friday’s July jobs report shows more jobs added than expected and if next week’s consumer price index report shows higher-than-expected inflation, markets will once again expect the Fed to become more hawkish. That would send stocks tumbling.
Now, the market is hitting a point where it has had trouble surpassing recently. The S&P 500 had reached just over 4100 Tuesday, before sellers came in to knock the index down. It dropped from that level several times since the end of May. Strategists at Credit Suisse note that, should the index rally up to 4200, heavy resistance—or selling pressure—should kick in at that level.
“Chasing the market here is tougher,” wrote Dennis DeBusschere, founder of 22V Research. “Expect consolidation.”
That is because “the market is too aggressively pricing in rate cuts next year,” wrote Lauren Goodwin, economist and portfolio strategist at New York Life Investments.
Here are some stocks on the move Tuesday:
) gained 1% as the group became the latest oil giant to report its best quarter in years amid soaring energy prices. BP saw adjusted profit surge to $8.5 billion in the prior quarter, up from $2.8 billion in the year prior and well ahead of analysts’ expectations.
Taiwan Semiconductor Manufacturing Co.
(TSM) dropped 0.3% after a 2.5% tumble Monday, as shares in the world’s largest chip maker weakened ahead of Pelosi’s visit to Taiwan.
DuPont de Nemours
(DD) slipped 2.7%, even after the materials science giant reported second-quarter adjusted profit per share of 88 cents from $3.3 billion in sales, outpacing Wall Street’s expectations of 75 cents in per-share profit from revenue of $3.25 billion.