Stocks had another brutal day on Tuesday, closing in the red after a furious rally early in the day was completely erased in the final hour of trading.
On Tuesday morning, the Dow was up as many as 420 points in a big bounce after Monday’s 588-point loss. The S&P 500 and Nasdaq were also up nearly 3% early on Tuesday.
The market, however, couldn’t hold onto its gains in a disappointing close, and when all was said and done, the Dow finished about 600 points off its highs while the S&P had its biggest one-day reversal since the height of the financial crisis in October 2008.
First, the scoreboard:
- Dow: 15,666, -205, (-1.3%)
- S&P 500: 1,867, -25, (-1.3%)
- Nasdaq: 4,506, -19.7, (-0.4%)
And now the top stories on Tuesday:
- It was another chaotic day in global markets, as US stock futures rallied overnight despite another collapse in China. After opening sharply higher US stocks pushed to their highest levels of the day near mid-afternoon, with the major indexes pushing a gain of nearly 3% on the day, almost erasing Monday’s losses. The averages, however, gave up all of this ground in the second half of the day and closed near session lows.
- Rich Barry, floor governor at The New York Stock Exchange, wrote in an afternoon email to Business Insider that Tuesday’s afternoon rally was about 2 things: China and Goldman Sachs. After Chinese markets closed on Tuesday, the People’s Bank of China, China’s central bank, moved to cut interest rates and reserve requirements, giving a final boost to stock futures that had already been gaining overnight. Goldman Sachs, meanwhile, circulated a note to clients reiterating the firm’s call that the US does not appear headed for recession. But again, these gains couldn’t hold.
- On the economic data front, we got 3 pieces of information about the housing market that showed home prices, on balance, rose in June, while new home sales rose 5.4% in July. The FHFA home price index rose 0.2% in June, less than the 0.4% that was expected. The Case-Shiller home price index showed prices fell 0.1% over the prior month in June but rose 5% when compared to last year. New home sales rose 5.4% in July to an annualized pace of 507,000.
- We also got consumer confidence data on Tuesday that showed a huge bounce back from July, as the Conference Board’s reading for August came in at 101.5. In the report, Lynn Franco at the Conference Board said, “Consumers’ assessment of current conditions was considerably more upbeat, primarily due to a more favourable appraisal of the labour market… The uncertainty expressed last month about the short-term outlook has dissipated and consumers are once again feeling optimistic about the near future. Income expectations, however, were little improved.”
- Also in economic data, the Richmond Fed’s manufacturing activity index fell to a reading of 0 in August after registering a 10 in July, while the preliminary reading on US service sector activity fell to 55.2 — which still indicates expansion — in the early part of August after hitting 55.7 in July.