US markets faced renewed pressure on Tuesday, with both the S&P 500 and Dow Jones Industrial Average ending slightly lower. Investors dealt with concerns about interest rates and digested mixed earnings reports, leading to cautious trading. Despite some strength in tech stocks that lifted the Nasdaq, there remained uncertainty over the Federal Reserve’s future moves and the impact of recent economic data. As traders looked ahead to more earnings releases later in the week, the mood on Wall Street remained watchful.

Key Takeaways:

  • S&P 500 Posts First Back-to-Back Loss Since September: The S&P 500 slipped 0.05%, closing at 5,851.20. This marks its first consecutive loss in over a month as investors grapple with uncertainty surrounding interest rates. Concerns over the Federal Reserve’s cautious stance on future rate cuts contributed to the market’s passive performance, halting the recent rally.
  • Dow Edges Lower with Second Straight Decline: The Dow Jones Industrial Average fell by 6.71 points, or 0.02%, ending the session at 42,924.89. The blue-chip index’s decline reflects investor hesitation, driven by mixed earnings results and ongoing concerns about the economic impact of interest rate decisions. Despite the modest drop, the Dow’s performance underscores broader market unease.
  • Nasdaq Outperforms Amid Broader Market Decline: The Nasdaq Composite climbed 0.18% to close at 18,573.13, standing out in a mixed market environment. Gains in select tech stocks helped the index defy the downward pressure seen in the S&P 500 and Dow. The positive momentum came as traders focused on strong earnings from tech companies, offering a small amount of optimism in an otherwise cautious market.
  • 10-Year Treasury Yield Climbs to 4.206%: The yield on the US 10-year Treasury rose over 2 basis points to 4.206%, reaching its highest level in three months. This increase follows a 12 basis point jump on Monday, reflecting market reactions to Federal Reserve officials’ warnings about the pace of future rate cuts. The elevated yield has fuelled concerns about borrowing costs and economic growth, keeping investor sentiment in check.
  • European Markets Dip as Investors Digest Earnings: European stocks closed lower, with the Stoxx 600 index down 0.2% on Tuesday. Most sectors and major bourses struggled as investors balanced mixed corporate earnings with concerns about US interest rates. The FTSE 100 slipped 11.70 points, or 0.14%, to 8,306.54, while France’s CAC 40 edged lower to 7,535. Germany’s DAX index continued its downward trend with a 1% decline from earlier highs, reflecting a cautious mood among European traders. Meanwhile, SAP, the German software giant, led gains in the European tech sector, rising 2% and hitting a record high after raising its revenue guidance on the back of strong cloud business growth.
  • Asia-Pacific Markets Decline Following Wall Street: Asia-Pacific markets mostly closed lower, mirroring Wall Street’s cautious sentiment. Japan’s Nikkei 225 fell 1.39% to 38,411.96, while the broader Topix index dipped 1.06% to 2,651.47. South Korea’s Kospi declined 1.31%, ending at 2,570.7, while the Kosdaq tumbled 2.84%, reaching its lowest level in over a month. Australia’s S&P/ASX 200 also dropped 1.66% to close at 8,205.7, hitting a near two-week low. China’s CSI 300 bucked the trend, climbing 0.57% to end at 3,957.78, supported by optimism over potential policy support for the domestic economy.
  • IMF Highlights Global Inflation Battle Amid Rising Risks: The International Monetary Fund (IMF) released its latest World Economic Outlook, signalling that the global fight against inflation is “almost won.” The report forecasts global headline inflation to drop to 3.5% by the end of 2025, down from 5.8% in 2024. Despite this positive trend, the IMF warned of increasing geopolitical risks and weaker long-term growth prospects, particularly in Europe and some emerging markets, adding a note of caution to the global economic outlook.
  • Oil Prices Extend Gains Above $72 as Middle East Tensions Ease: US crude oil prices rose 2.17% to close at $72.09 per barrel, while Brent crude increased 2.36%, ending the session at $76.04 per barrel. The recovery follows last week’s steep sell-off, as traders downplayed the likelihood of a supply disruption from Middle East tensions. Weak demand from China continues to weigh on the market, but recent moves by Beijing to cut lending rates have provided some support to prices.

FX Today:

  • EUR/USD Under Pressure Amid Rising US Yields: EUR/USD traded near 1.0794 on Tuesday as the pair continued to face downward pressure from rising US Treasury yields. The pair remains below its key 50-period SMA at 1.0874, with the 100-period SMA at 1.0947 acting as a longer-term resistance level. The strength in the US dollar, lifted by higher yields, has kept EUR/USD quiet. Immediate support is seen at 1.0780, with a break below this level potentially targeting 1.0750. On the upside, the 50-period SMA at 1.0874 and the 200-period SMA at 1.1029 are critical resistance points.
  • GBP/USD Holds Above Key Support as Recovery Stalls: GBP/USD traded around 1.2982 on Tuesday, managing to stay above its 200-period SMA at 1.2978, which has served as a key support level. Despite attempts to recover, the pair remains under pressure, with the broader trend still favouring the US dollar. The 50-period SMA at 1.3034 acts as the immediate resistance, while further upside could be capped by the 100-period SMA at 1.3104. On the downside, failure to hold above 1.2978 could see GBP/USD test lower levels at 1.2900 and potentially 1.2850 if bearish momentum persists.
  • USD/CHF Struggles Below Resistance Levels: USD/CHF hovered around 0.8655 on Tuesday, with the pair facing resistance near the 50-period SMA at 0.8627. Despite recent attempts to push higher, USD/CHF has struggled to sustain gains above key levels, indicating a lack of momentum. Support is seen at the 200-period SMA at 0.8523, which has attracted buyers during previous dips. For any upside potential, USD/CHF would need to clear the 50-period SMA and hold above 0.8650, which could pave the way for a move towards 0.8700. Failure to break higher may lead to a retest of 0.8600 and 0.8550 levels.
  • AUD/USD Bears Maintain Control Amid Weak Sentiment: AUD/USD traded at 0.6682 on Tuesday, maintaining its downward bias as the pair remains below both its 50-period SMA at 0.6703 and 100-period SMA at 0.6760. The bearish sentiment is reflected in the pair’s inability to reclaim these key levels. Support is seen around 0.6650, with a break lower potentially targeting 0.6620 and 0.6600. On the upside, a sustained move above the 50-period SMA could signal a potential recovery towards 0.6750, but the pair remains vulnerable to further declines as long as it stays below the moving averages.
  • Gold Remains Strong Amid Uncertainty: Gold prices hovered near $2,748.67 per ounce on Tuesday, continuing to attract demand as geopolitical uncertainties and concerns over the US economic outlook persist. The metal is holding well above its 50-period SMA at $2,684.00, suggesting that the bullish trend remains intact. A push above the recent high of $2,750.00 could see gold testing resistance at $2,770.00 and potentially higher. On the downside, support is firm at the 50-period SMA of $2,684.00, with the 100-period SMA at $2,663.02 providing additional downside protection. A break below these levels could shift the outlook towards a more bearish stance, targeting $2,650.00.

Market Movers:

  • General Motors Jumps on Strong Earnings and Upgraded Guidance: Shares of General Motors surged nearly 10% after the automaker reported third-quarter adjusted earnings of $2.96 per share, significantly above analysts’ estimates of $2.43 per share, according to LSEG. Revenue also beat expectations, coming in at $48.76 billion versus the anticipated $44.59 billion.
  • Philip Morris Rallies on Raised Profit Forecast: Philip Morris International saw its stock soar roughly 10% after raising its annual profit outlook. The tobacco giant’s positive outlook was driven by strong results from its smoke-free products segment, which has been a key growth driver. 
  • Verizon Slips After Revenue Miss: Verizon Communications fell around 5% on Tuesday after reporting third-quarter revenue of $33.33 billion, slightly missing analysts’ estimates of $33.43 billion, as compiled by LSEG. Despite the revenue shortfall, the company managed to post earnings per share of $1.19, narrowly beating the expected $1.18. 
  • Lockheed Martin Declines on Lower-Than-Expected Sales: Shares of Lockheed Martin dropped more than 6% after the defence contractor reported third-quarter revenue of $17.1 billion, below the $17.35 billion expected by analysts surveyed by LSEG. 
  • Quest Diagnostics Surges on Earnings Beat: Quest Diagnostics rose nearly 7% after posting better-than-expected third-quarter results. The company reported adjusted earnings of $2.30 per share on revenue of $2.49 billion, surpassing analyst expectations of $2.26 per share and $2.43 billion in revenue.
  • Norfolk Southern Gains on Positive Earnings Surprise: Shares of Norfolk Southern climbed about 5% after the railroad operator reported third-quarter earnings and revenue that exceeded analyst expectations. This rise put Norfolk Southern on track for its best day since late July, when shares jumped 10.9%.
  • GE Aerospace Tumbles on Mixed Results: GE Aerospace shares fell approximately 9% after reporting third-quarter adjusted revenue of $8.94 billion, missing the analyst consensus estimate of $9.02 billion. While adjusted earnings per share of $1.15 slightly beat forecasts by 1 cent, the revenue miss and concerns over future.

As the trading day concluded, markets remained cautious amid mixed signals from corporate earnings and ongoing concerns about the Federal Reserve’s interest rate policy. The S&P 500 and Dow Jones faced back-to-back losses, while the Nasdaq managed to inch higher, supported by a few standout earnings reports. Rising US Treasury yields, reaching 4.206%, continued to pressure equity markets, reflecting uncertainty around the pace of future rate cuts. European stocks also struggled with losses, while most Asian markets followed suit, tracking Wall Street’s subdued performance. With major earnings reports from companies like Tesla and Coca-Cola still on the horizon, investors remain focused on the path forward for interest rates and economic data, setting the stage for more volatility in the days ahead.