U.S. stocks concluded Tuesday’s trading session with mixed results after the release of better than expected consumer confidence data and rising housing prices. A short-lived rally in the biotech sector fizzled prior to making a drastic impact, keeping Tuesday’s gains limited. Adding to the concerns over a slowing global economy was the latest reading on China’s industrial profits, which took a turn for the worst in the latest report.
The Standard and Poor’s 500 Index added 2.32 points, or 0.1%, to trade at 1,884.09 as it broke a five-day losing streak. The index traded within a relatively low 28-point range after shedding 4.3% over the last five sessions. The Dow Jones industrial Average added 47.24 points, or 0.3%, to trade at 16,049.12 as the index traded within a 177-point range. Also trading within a tight 109-point range, the NASDAQ Composite extended its losing streak to six days as it lost 26.65 points, or 0.6%, to trade at 4,517.32.
The rise in September’s consumer confidence gauge caught forecasters by surprise, but still wasn’t enough to boost investor confidence in the stock market. Analysts point to the macro-oriented point of view as the basis for the stock market’s recent weakness. The fundamental focus on China, Brazil, payroll data and the Fed’s interest rate hike are keeping investors on the conservative side as positive outlooks for the economy’s future remain reserved. This can be seen in the rising demand for ultra-safe government debt. The yield on 10-year Treasury notes lowered from 2.093% to 2.053% as prices rose on Monday.
Crude oil fell 26 cents, or 0.57%, to trade at $44.97 a barrel. The ongoing slump in oil prices is beginning to take its toll on U.S. producers. Investors are concerned that more companies will join the likes of Samson Resources and Hercules Offshore in filing for bankruptcy protection as bank credit is tightened in a time of lower revenue. A large percentage of oil producers cash flow is already reserved for servicing debt, which was expanded to offset low revenues earlier in the year. According to the Energy Information Administration, 83% of the operating cash at U.S. companies with onshore activity was already reserved for prior debt, making it the highest rate since 2012. On a global scale, investors are concerned that the addition of more crude oil into the worldwide market will deepen the supply glut and keep prices low. The nuclear deal with Iran paves the way for the seventh-largest oil producer to market reentry. Furthermore, Iraq is looking to increase its revenue, most likely by upping its exports, in order to fund their ongoing battle with the Islamic State in the region.
U.S. and eurozone unemployment data are scheduled to release later today, followed by Chinese and Japanese manufacturing data on Thursday. However, the week’s major focus will be on Friday’s Japanese unemployment and U.S. nonfarm payrolls data.