The Dow Jones and the S&P 500 traded mixed Tuesday morning, after opening the holiday-shortened week higher. Stocks reacted to two conflicting economic reports about business activity.
The Nasdaq composite was trading higher 0.1% at midday after a seesaw morning. The Dow Jones Industrial Average gained 0.4% while the S&P 500 was up 0.2%.
The small-cap Russell 2000 index shed 0.4%.
Volume fell on the Nasdaq and the NYSE vs. the same time on Friday.
U.S. crude oil prices rose 1% on Tuesday, trading just under $88 per barrel after a small OPEC+ production cut fueled a Monday rally. This marked the first production cut in over a year.
Recession and inflation-resistant sectors were Tuesday's outperformers. The S&P Utilities Sector ETF, the S&P Real Estate Select ETF and the S&P Health Sector ETF all gained around 1%.
European Markets Trim Losses
European markets gained after falling on Monday, in reaction to Russia's indefinite halt of natural gas to Europe. Putin is retaliating for Friday's G-7 decision to put a price cap on Russian oil.
The London FTSE 100 gained 0.2%, the German DAX 0.9% and the French CAC 40 0.2%.
U.K. retail sales slowed in August amid weak back-to-school spending, according to the latest British Retail Consortium and KPMG report.
Asian stocks were mixed, with both Japan's Nikkei 225 and Hong Kong's Hang Seng Index trading flat, while the Shanghai index gained 1.4%.
Conflicting Business Activity Reports Leaves Stock Market Mixed
The Institute For Supply Management's survey rose to 56.9 in August from a July reading of 56.7, easily beating the Econoday forecast of 55.4.
At the same time, however, the seasonally-adjusted final S&P Global US Services PMI Business Activity Index registered 43.7 in August, down from 47.3 in July.
"August saw the US economy slide into a steepening downturn, underscoring the rising risk of a deepening recession as households and business grapple with the rising cost of living and tightening financial conditions," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
On the other hand, the ISM survey showed that "business activity is the highest since December, an important break point, as the consumer showed stable demand for services after the headwinds of a war, inflation, and geopolitical uncertainty," Jeffrey Roach, Chief Economist for LPL Financial.
Markets have begun to write off a 75-basis point hike as an inflation-fighting measure when the Federal Reserve meets in two weeks. Investors now see a 68% chance of a 75-basis-point hike vs. a 32% likelihood the Fed will boost rates by 50 basis points.
The 10-year U.S. Treasury yield gained 0.13% to 3.33%.
Outside The Dow Jones: Shockwave Medical Drops On Analyst Downgrade
Wingstop soared more than 8% after the company unveiled 12 new chicken sandwiches last week. And today it boosted its Relative Strength Rating from 87 to 91. Wingstop is not currently offering a proper buying opportunity but appears to be forming a cup-with-handle formation.
IBD 50 stock Shockwave Medical has dropped more than 4% after an Oppenheimer downgrade.
Nvidia is looking to break its six-day losing streak. Currently it is up a mere 0.4% after being down 24% over the previous six day period. If it closes down today this would be the longest losing streak since June 3, 2019, when it fell for eight straight trading days.
The Innovator IBD 50 ETF has lost 1.7%.
Earnings season is mostly over, but HealthEquity is scheduled to report July results after the close of business on Tuesday. FactSet analysts expect the provider of health savings accounts to earn 33 cents per share on $204 million in sales.
Follow Michael Molinski on Twitter @IMmolinski
