Wall Street’s major indexes saw modest gains Tuesday. This was largely due to a good performance by mining stocks after China announced its expansive stimulus package.
Overall market gains were capped by concerns over a slowing US economic growth, combined with the uncertainty of Federal Reserve’s next policy decisions.
The rally initially lost momentum when a Conference Board report revealed an unexpected drop in US consumer sentiment for September. This was largely due to growing concerns about the health of the US labor market.
The FedWatch Tool of CME Group shows that traders are now leaning towards a rate reduction by 50 basis points, as opposed to earlier predictions which had an equal split.
“We received a bit of a cold shower with this morning’s consumer confidence numbers, which could add to the concerns that the Fed was a few days late,” Reuters reported quoting Michael James. James is senior vice president for equity trading at Wedbush.
The S&P 500 and Dow Jones Industrial Average both stayed near record highs for the entire month. This was fueled by the Fed’s aggressive rate cuts earlier in the year and extra support from policymakers.
The Dow Jones Industrial Average.DJI edged upwards by 9.72, or 0.02% to close at 42,134.37. Meanwhile, the S&P500 (.SPX), added 6.16, or 0.12% points, finishing at 5,725.17.
The Nasdaq Composite Index (.IXIC), which closed at 18,050.40, gained 76.13, or 0.4%.
Materials stocks (.SPLRCM), which are among the S&P 500’s 11 segments, buck the trend and posted a 1.1% gain.
Prices of metals soared in China after the country introduced the most comprehensive stimulus measures to fight deflation since the Pandemic.
The top two mining companies are lithium and copper.
Freeport-McMoRan’s (FCX.N), Southern Copper’s (SCCO.N), Albemarle’s (ALB.N), and Arcadium’s (ALTM.N), all climbed 7%.
US listed shares of Chinese companies also followed this upward trend. Alibaba (BABA.N), PDD Holdings(PDD.O), and Li Auto(LI.O), both grew by 8.4%. This is due to gains on the Chinese domestic market.
James Add:
China’s efforts to boost its economy will add optimism for companies that do extensive business there. You can see this reflected in the stocks of some of these firms.
Microsoft (MSFT.O), however, saw a decline of more than 1%.
Chipmakers also had a good day as the Philadelphia SE Semiconductor Index.SOX rose 1.7%. Qualcomm (QCOM.O), Intel (INTC.O), and the broader technology sector (.SPLRCT) all gained 1.8%.
Reuters reported that Federal Reserve Governor Michelle Bowman warned that the inflation rate remained “uncomfortably” above the central bank’s 2% goal, thus signaling the need for a cautious approach as the Fed continued to reduce interest rates.
Investors will be closely watching the weekly release of data including jobless claims, personal consumption spending, and other key indicators that are likely to influence the market’s sentiment this week.
Visa (V.N), a stock that is traded by individuals, fell 4% after a report that stated that the US Department of Justice was planning to sue the payment giant for antitrust violations, alleging monopoly of the debit card industry.
The financial sector (.SPSY) fell by 1% as a result of this development.
On the NYSE, advancing shares outnumbered those in decline by a ratio 1.38 to 1 and on the Nasdaq it was 1.13 to 1.
S&P 500 registered 52 new 52 week highs but no new lows. Nasdaq Composite recorded 76 highs to 69 lows.
The post Wall Street edge higher as China’s stimulus boosts the mining sector, Fed uncertainty persists could be updated as new information becomes available.
