Despite positive earnings reports from tech giants such as Microsoft, Alphabet, and Boeing, the market remains in a state of uncertainty due to weaker-than-expected economic data and ongoing debates in Washington over raising the debt ceiling.
Meanwhile, the US dollar weakened as investors continue to grapple with these mixed signals.
Tech stocks bolster S&P 500 amid economic uncertainty
Tech stocks provided much-needed support to the S&P 500, offsetting weakness in other sectors such as industrials and transportation.
According to Bill Northey, Senior Investment Director at U.S. Bancorp, megacaps have been performing well on the back of strong earnings, but beneath the surface, there is a trend of narrow breadth.
Solid earnings from major companies like Microsoft, Alphabet, and Boeing helped mitigate the impact of disappointing economic data, which indicates a potential decline in corporate expenditures on core capital goods.
However, Northey added that monthly durable goods reports are historically volatile and that the broader trend aligns with a decelerating US economic environment.
Debt ceiling debate adds to investor anxieties
As Congress continues to wrangle over raising the federal debt ceiling, investor concerns are only growing. Northey believes that the debt ceiling represents a potential event risk that could negatively affect capital markets.
While the Dow Jones Industrial Average fell slightly, the S&P 500 managed to gain a modest 0.21%.
European stocks, however, suffered significant losses, with the pan-European STOXX 600 index dropping by 0.92%.
In Asia, the MSCI’s broadest index of Asia-Pacific shares outside Japan increased by 0.25%, while Japan’s Nikkei lost 0.71%.
Yields on benchmark 10-year Treasury notes remained stable, while short-term Treasury yields tumbled ahead of the possible vote on the US debt ceiling.
The US dollar softened against a basket of major world currencies, with the euro strengthening by 0.68% and the Japanese yen by 0.25%. Sterling also gained, trading up 0.54% on the day.
Crude prices drop
Crude prices continued their downward trajectory as weak economic data fueled fears of an economic downturn. US crude fell by 0.23% to $76.89 per barrel, while Brent dropped by 0.92% to $79.86 per barrel.
Gold prices remained steady, with spot gold hovering just below the key $2,000 per ounce level amid ongoing turmoil in the US banking sector.
The recent fluctuations in the stock market underscore the challenges investors face in making sense of mixed signals from both the tech sector and the broader economy.
As debates over the debt ceiling persist and economic data remains uncertain, the markets are left in a state of limbo, with investors keeping a close eye on developments in Washington and across the global economy.