Stock market today: S&P 500 falls as job cuts stoke economic fears, tech stutters
Investing.com - Futures linked to Canada’s main stock exchange ended lower on Tuesday. The S&P/TSX Composite almost 500 points or 1.64% at 29,777.8
On Monday, the index closed up by 0.1% at 30,275.06, as support from consumer discretionary shares was tempered by markets awaiting clearer signs about the trajectory of corporate earnings and Canada’s economy.
Output and new orders in Canada’s manufacturing sector contracted at a cooler rate in October, a metric from S&P Global showed on Monday. A downturn in the segment as a whole subsequently eased.
U.S. stocks slide
U.S. stock index retreated sharply, as investors fretted about the health of the U.S. economy while digesting more corporate earnings.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average slipped 251 points, or 0.5%, the S&P 500 index dropped 1.2%, and the NASDAQ Composite fell 2%. .
The main indices on Wall Street ended in mixed fashion on Monday, with the blue-chip Dow Jones Industrial Average declining while the benchmark S&P 500 and tech-heavy NASDAQ Composite both gained.
Concerns about U.S. economic health
Worries over the health of the U.S. economy have caused investors to bank some of the recent gains as they start to fret about the extremely high valuations implied by the current levels of the major stock indices.
The tech-heavy Nasdaq Composite has gained over 23% year-to-date, while the broad-based S&P 500 is over 16% higher and the blue chip DJIA has advanced over 11%.
Yet the latest ISM manufacturing index showed factory activity in the U.S. contracted for an eighth straight month in October, with a reading of 48.7, below the 50-point mark that separates growth from contraction.
The ongoing government shutdown, which is flirting with becoming the longest such closure in American history, has left investors and Fed policymakers without a range of critical data points needed to establish the state of the U.S. economy.
And while Fed Chair Jerome Powell suggested that last week’s interest rate cut by the U.S. central bank might be the last of the year, both his colleagues Mary Daly and Governor Lisa Cook indicated that an easing at the December Fed meeting was still a possibility.
Palantir falls with tech sector in focus
The dominant tech sector has remained in focus, after Amazon and OpenAI announced a multi-year partnership valued at around $38 billion, under which Amazon Web Services will supply large-scale cloud infrastructure to support OpenAI’s next generation of models.
The deal reinforced expectations that spending on AI infrastructure will continue to accelerate through 2025, benefiting chipmakers and data-center providers.
Additionally, shares of Palantir Technologies (NASDAQ:PLTR) fell in premarket trading, despite the data analytics titan posting another quarter of record revenue.
Palantir, whose operations also involve software for the defense sector, reported net profit of $475.6 million on $1.18 billion in third-quarter sales, both topping estimates.
Writing in a letter with the release, Chief Executive Alex Karp said the business is "now producing more profit in a single quarter than it did in revenue not long ago."
The company also forecast better-than-anticipated current-quarter sales, fueled by a boom in AI adoption which has lifted demand for its data analysis services.
Elsewhere, Advanced Micro Devices (NASDAQ:AMD) is set to report after the closing bell, becoming the latest AI chipmaker to release quarterly results following an intense round of dealmaking in the sector.
Last month, AMD also said it would supply AI chips to OpenAI as part of a multi-year deal that would both generate billions of dollars in annual revenue and grant the AI startup access to about a 10% stake in the firm.
Crude retreats on supply glut concerns
Oil prices slipped lower Tuesday as investors digested the news from the weekend’s OPEC+ meeting, amid ongoing concerns surrounding a global supply glut.
Brent futures dropped 1.1% to $64.17 a barrel, and U.S. West Texas Intermediate crude futures fell 1.4% to $60.20 a barrel.
On Sunday, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, agreed to a small oil output increase for December and a pause in increases in the first quarter of next year.
Market participants are now waiting for the latest U.S. inventory data from the American Petroleum Institute, due later in the day, for more trading cues.
Gold inches down
Gold declined modestly, pressured by a stronger U.S. dollar and lingering uncertainty over the Federal Reserve’s next policy move after Chair Jerome Powell’s hawkish tone last week.
Spot gold fell 0.4% to $3,986.30 per ounce by 07:58 ET, while U.S. gold futures dropped 0.5% to $3,995.87.
The metal has struggled to hold above the $4,000 mark as the dollar extended gains, making bullion more expensive for overseas buyers.