Wall Street’s S&P 500 index closed 0.5% higher on Tuesday, but concerns over slowing economic growth limited gains. Meanwhile, the Dow dipped as banking stocks slumped following warnings of weaker-than-expected performance, and energy stocks also struggled.
Energy was the worst-performing sector among the S&P 500’s 11 industry groups, declining by 1.9% as crude oil futures fell in response to OPEC+ reducing its demand forecast for 2024 and 2025.
Bank stocks took a hit after Goldman Sachs CEO David Solomon warned of a potential 10% drop in trading revenue for the current quarter. JPMorgan Chase also lowered expectations for interest income, and Ally Financial’s CFO noted that credit challenges had intensified, leading to a 17.6% drop in the company’s stock.
These warnings overshadowed news from the Federal Reserve’s regulatory chief, who announced plans to ease earlier proposals for raising capital requirements at major banks.
“A lot of today’s activity is driven by concerns over banks lowering earnings expectations for the current quarter,” said Lindsey Bell, chief strategist at 248 Ventures. “JPMorgan, Goldman Sachs, and Ally’s warnings dominated the narrative, as they signaled that business is slowing down.”
Investors also worried about the broader economic outlook, especially with weaker energy demand and uncertainty over the Federal Reserve’s next move on interest rates, compounded by the upcoming U.S. presidential election on November 5.
“We’re seeing signs of slowing economic growth globally, which adds to the unease in an already uncertain period,” Bell added, noting that September and October could be difficult months for the stock market.
The Dow Jones Industrial Average dropped by 92.63 points, or 0.23%, to close at 40,736.96. The S&P 500 rose 24.47 points, or 0.45%, to finish at 5,495.52, while the Nasdaq Composite gained 141.28 points, or 0.84%, to close at 17,025.88.
Following last week’s steep losses, Wall Street began the week with gains of over 1%, as investors sought bargain opportunities. The focus now shifts to the August consumer price index (CPI) inflation report due on Wednesday and the producer price index (PPI) report set for Thursday.
The S&P 500’s financial sector was the second-worst performer, dropping 1%, with JPMorgan Chase down 5.2% and Goldman Sachs losing 4.3%.
In other stock news, Hewlett Packard Enterprise (HPE) saw its stock drop 8.5%, making it the biggest loser in the S&P 500 after announcing a $1.35 billion stock offering to fund its acquisition of Juniper Networks. On the other hand, Oracle shares surged 11.4%, becoming the biggest gainer in the S&P 500 after the company posted better-than-expected quarterly results.
On the NYSE, advancing stocks outnumbered decliners by a ratio of 1.15-to-1, with 390 new highs and 159 new lows. On the Nasdaq, advancing issues slightly outpaced decliners by a 1.06-to-1 ratio, with 48 new highs and 156 new lows.
Trading volume across U.S. exchanges totaled 10.75 billion shares, in line with the 20-session average.
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