U.S. stocks closed lower on Tuesday as investors, deprived of economic data resulting from the shuttered government, looked to secondary indicators and remarks from U.S. Federal Reserve officials for clues regarding economic weakness and monetary policy.
All three indexes ended in negative territory after a consumer expectations survey from the New York Federal Reserve showed deteriorating future expectations and rising inflation projections. The report garnered increased scrutiny amid a federal data blackout resulting from a partisan congressional impasse that extended the government shutdown to its seventh day.
Investors have had to rely on secondary, independently produced data, along with remarks from monetary policymakers, to gauge the likelihood that the Federal Reserve will implement its second rate cut of the year at this month's policy meeting.
"The New York Fed report probably gave traders an excuse to take some profits since the S&P had been up for seven days in a row," said Sam Stovall, chief investment strategist of CFRA Research in New York. "There is an awful lot of uncertainty the longer the government remains shut down because of the absence of any economic data."
Economically sensitive sectors, including homebuilding, housing, airlines, and transport underperformed the broader market.
"The market is still very much centered on AI driving everything, and I think some of the bloom is off the rose," said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois.
Fed Governor Stephen Miran stated his case for continued rate cuts, stressing the risks of keeping policy too restrictive.
The Dow Jones Industrial Average fell 91.99 points, or 0.20%, to 46,602.98, the S&P 500 lost 25.69 points, or 0.38%, to 6,714.59 and the Nasdaq Composite lost 153.30 points, or 0.67%, to 22,788.36.
Among the 11 major sectors of the S&P 500, consumer discretionary suffered the steepest percentage decline, while consumer staples and utilities were the top gainers.
Tesla shares extended their losses, dropping 4.5% after the electric carmaker unveiled its low-cost Model Y.
AMD advanced 3.8% after Jefferies upgraded the stock rating to "buy" and other brokerages hiked their price targets the day after the chipmaker's supply deal with OpenAI bolstered the tech rally.
Corona beer maker Constellation Brands gained 1% after posting a smaller-than-expected drop in second-quarter sales.
IBM rose 1.5% after the company announced a partnership with AI startup Anthropic.
U.S.-listed shares of Trilogy Metals soared 207.8% after the White House said it would acquire a 10% stake in the company.
AppLovin surged 7.6%, recouping nearly half of its losses from the prior session, and topped the S&P 500 after brokerages Citi Research and Oppenheimer allayed concerns after a report on a U.S. Securities and Exchange Commission probe into its data collection practices.
Bitcoin-related stocks, including Coinbase, Strategy, Riot Platforms, and MARA Holdings, reversed Monday's gains as the cryptocurrency backed away from record highs.
Reuters
