Stocks were choppy Tuesday as market participants looked ahead to tonight's debate between presidential nominees Kamala Harris and Donald Trump. Anxiety surrounding Wednesday's key inflation update also kept sentiment in check.
"In Tuesday's debate, investors will be looking for specific policy elaborations thus far mostly lacking from both candidates, on everything from tax policy, tariffs and deficit spending," says David Bahnsen, chief investment officer at The Bahnsen Group, adding that it's unlikely we'll hear any actual specifics.
However, Bahnsen notes that given how close the election polls are at the moment, "Tuesday's debate will be important in terms of lending clues to who the eventual winner may be, which of course has market and policy implications."
August CPI lands in the morning
Another big event the market is tuned into is tomorrow morning's release of the August Consumer Price Index (CPI).
We haven't gotten too many surprises on the CPI front lately and the August data is likely going to show inflation continues to cool and drop closer to the Fed's 2% target, says Jay Woods, chief global strategist at Freedom Capital Markets.
However, an upside surprise could catch markets off-guard and "throw a major wrench into the soft landing narrative as cuts may not be considered warranted with an unexpected rise in inflation," Woods adds.
As for today's economic data, the NFIB said its Small Business Optimism Index fell by 2.5 points in August to 91.2, marking the 32nd consecutive month below the 50-year average of 98.
"Small business owners appear to be more preoccupied with worsening labor market conditions and dimming sales outlooks than they are looking forward to incoming rate cuts," says Charlie Dougherty, senior economist at Wells Fargo. "As nonfarm payrolls continue to show a moderation in hiring, hiring plans trended lower and the net share of small businesses actually adding headcounts reached its lowest reading in two years."
Oracle soars on strong earnings, AWS partnership
In single-stock news, Oracle (ORCL) surged 11.4% after the enterprise IT firm beat top- and bottom-line expectations for its fiscal first quarter and announced a new multi-cloud agreement with Amazon.com's (AMZN, +2.4%) Amazon Web Services.
"The better price-performance of Oracle Cloud Infrastructure, in addition to tailwinds related to artificial intelligence training and strong demand for sovereign/dedicated cloud regions, are all contributing to improving cloud growth and robust bookings momentum," says Sebastien Naji (Outperform, the equivalent of Buy).
The analyst continues to see a favorable risk/reward setup for the large-cap stock, "driven by a continued re-rating of shares as Oracle moves into a higher growth, higher margin strata."
Apple slips on unfavorable tax ruling
Elsewhere, Apple (AAPL) stock fell 0.4% after the European Union's top court ruled the tech giant must pay 13 billion euros in back taxes to Ireland. The ruling stems from a 2014 investigation by the European Commission where it was found AAPL received "illegal" tax benefits from Ireland for over two decades.
A regulatory filing from Apple indicated it will incur a $10 billion charge on its fiscal fourth-quarter earnings report.
Wall Street didn't have much to say about the hefty tax bill but analysts were quick to weigh in following Monday's September product launch event.
Among them was Wedbush analyst Daniel Ives, who believes the company's new iPhone 16 series "will be the most successful iPhone unit launch in its history, as Apple Intelligence will be the launching pad for the consumer AI Revolution globally."
High-single-digit growth upside for iPhone sales over the next year or so will help drive the tech giant's market cap to $4 trillion in 2025, Ives contends.
JPMorgan, Goldman Sachs lead Dow lower
Apple wasn't the only declining blue chip stock today. Indeed, JPMorgan Chase (JPM, -5.2%) and Goldman Sachs (GS, -4.4%) were the worst Dow Jones stocks after both companies warned that financial estimates are too optimistic.
JPMorgan President Daniel Pinto, for one, said expectations for $90 billion in net interest income next year "is not very reasonable" due to impending Fed rate cuts. Pinto also said analysts' forecast for expenses of $94 billion will likely come in "a bit higher" because of inflation and investments.
Meanwhile, Goldman Sachs CEO David Solomon warned that the bank will post a $400 million pretax hit to third-quarter revenue due in part over plans to sell its GM Card business.
As for the major indexes, the blue chip Dow Jones Industrial Average fell 0.2% to 40,736, while the broader S&P 500 (+0.5% at 5,495) and the tech-heavy Nasdaq Composite (+0.8% at 17,025).
