Stocks staged a comeback after heading for what would have been a second straight selloff this week. The Dow fell more than 200 points and the S&P 500 went red for the year, but stocks firmed in the final 90 minutes of trading and closed near their highs of the day.
First, the scoreboard:
- Dow: 17,772.77, +89.19, (0.50%)
- S&P 500: 2,081.49, +12.73, (0.62%)
- Nasdaq: 4,997.09, +5.15, (0.10%)
And now, the top stories on Tuesday:
- Oil turned green following a 4% drop. After plunging to a three-month low of around $US50.75 per barrel, West Texas Intermediate crude rallied, touching $US52.90. On Monday, crude fell more than 7%.
- Other commodities got smoked. Gold fell more than $US15 an ounce to the weakest in nearly three months, at around $US1146.80. Until today, gold had shrugged the global market selloff following the Greek referendum vote on Sunday, and a strengthening US dollar. Silver dropped more than 4% to a seven-month low of $US14.62. Platinum sank even lower after falling to a seven-year trough on Monday, and it touched $US1,039.60 today.
- The trade deficit widened 2.9% to $US41.9 billion, less than expected in May. Exports had the biggest fall in three months. Economists had forecast a deficit of $US42.7 billion from $US40.9 in April. In a note to clients after the data, Pantheon Macroeconomics’ Ian Shepherdson wrote, “in one line: Trade will add to Q2 GDP growth, but core exports remain very weak.”
- Shake Shack shares fell 10% after Morgan Stanley analysts said the stock is too expensive. They cut their rating on the burger chain to “Underweight” from “Equal Weight. “While a powerful emerging brand executing on all its early commitments to its investors, [the] stock is overpriced, in our view, potentially reflecting both technical market dynamics as well as ‘brand’-related optimism that is not supported by fundamentals,” they wrote.
- Deutsche Bank downgraded Tesla shares to “Hold” from “Buy” while raising their price target 14% to $US280 from $US245. They believe the company has tremendous growth ahead, but much of it is already factored into the share price. Tesla shares fell more than 4%.
- Chinese stocks fell on Tuesday despite several measures authorities took over the weekend to rescue the market. On Monday, nearly 25% of all stocks stopped trading to “self preserve,” state media reported. The Shanghai Composite index closed down 1.3%. On Saturday, the government announced a “market-stabilisation fund” supported by about 21 Chinese brokerages, who pledged to buy shares worth around 120 billion yuan ($US19.3 billion.)