Stocks Lack Direction As Traders Remain Cautious Ahead Of Fed Meeting, Nvidia Falls On Export Controls: What's Driving Markets Tuesday?

Risk sentiment has encountered a setback following Monday’s rally, as stocks on Wall Street grapple with challenges in generating fresh gains. This comes as traders gear up for the Federal Open Market Committee meeting commencing Tuesday. The Fed will unveil its latest interest rate decision and Chair Jerome Powell’s remarks tomorrow.

NVIDIA Corp. NVDA fell 2.2% in response to a report suggesting the chipmaker might have to cancel advanced chip orders worth up to $5 billion for China due to new U.S. government restrictions.

Cues From Tuesday's Trading

The S&P 500 rose 0.2%, while both blue-chip stocks in the Dow Jones Industrial Average and tech stocks in the Nasdaq 100 were flat for the day. Small caps in the Russell 2000 jumped 0.9%.

US Index Performance On Tuesday

Analyst Color

“The market climbs a wall of worry, so there is always something to scare investors,” said LPL Financial strategists Jeffrey Buchbinder, Lawrence Gillum, Quincy Krosby and Jeffrey Roach.

“Today investors may feel like that wall is unusually tall, given stiffening headwinds facing the economy, including the effects of rising rates, and two wars overseas as the S&P 500 enters correction territory (down 10% from its recent high),” they added.

The analysts said they expect a strong job market, cooling inflation, the end of Fed rate hikes, stable interest rates and growing corporate profits to help stocks overcome these worries and keep a young bull market going.

“And we believe the macroeconomic environment and seasonal tailwinds will provide enough support for stocks to move modestly higher over the balance of the year, though the path may be bumpy,” they added.

Tuesday Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.1% higher to $416.03.
• The SPDR Dow Jones Industrial Average ETF DIA was flat at $329.09.
• The Invesco QQQ Trust QQQ fell 0.1% to $348.71, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Real Estate Select Sector SPDR Fund XLRE outperformed, up 1.4%.
• The Energy Select Sector SPDR Fund XLE and the Health Care Select Sector SPDR Fund XLV, underperformed, both down 0.2%.

Latest Economic Data

The S&P CoreLogic Case-Shiller 20-city home price index recorded its largest year-on-year increase in seven months, rising by 2.2%, following a 0.2% gain in July. Expectations were for a 1.6% increase.

The Federal House Finance Agency’s house price index revealed a 0.6% month-on-month increase in August, advancing from a 0.5% rise in July.

See also: Futures Vs. Options

Stocks In Focus

• Pinterest, Inc. PINS rallied over 18% following the release of its quarterly results.
• Among the other stocks reacting to their earnings are Wolfspeed, Inc. WOLF (up over 22%), Arista Networks, Inc. ANET (up about 13%), and Monolithic Power Systems, Inc. MPWR (up about 7%), JetBlue Airways Corporation JBLU (down about 14%), Caterpillar, Inc. CAT (down about 5%), Pfizer Inc. PFE (down 1.3%) and BP Plc. BP (down about 4%).
• Companies due to report after the close include Advanced Micro Devices, Inc. AMD, First Solar, Inc. FSLR, Chesapeake Energy Corporation CHK, Meritage Homes Corporation MTH, Unum Group UNM and Yum China Holdings, Inc. YUMC.

Commodities, Bonds, Other Global Equity Markets

Crude oil fell 0.7%, with a barrel of WTI-grade crude trading at $81. The United States Oil Fund ETF USO was 0.5% lower to $75.67.  

Treasury yields were slightly lower, with the 10-year yield down by 3 basis points to 4.86% and the 30-year yield down by 4 basis points to 5.01%. The iShares 20+ Year Treasury Bond ETF TLT was 0.5% higher for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP up 0.5%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.5% lower to 1.0560.

European equity indices had a positive session. The SPDR DJ Euro STOXX 50 ETF  FEZ rose 0.2%. 

Gold edged 0.2% down to $1,991/oz, while silver fell 1.5% to $21.03. Bitcoin BTC/USD was 0.1% lower to $34,446.

Staff writer Piero Cingari updated this report midday Tuesday. 

Photo via Shutterstock.