On Tuesday, Wall Street closed lower due to a broad sell-off brought about by disappointing consumer confidence data. This dampened optimism in the market while fueling concerns about the recession and the upcoming earnings season.
There was a fall of 2% recorded in the S&P 500 index, while Nasdaq shed 3%, with Amazon.com, Microsoft Corp, and Apple Inc. being the biggest drag on the index. There was a 1.6% fall in the blue-chip Dow index.
Market analysts said that the equity market had been doing quite well until the consumer confidence data hit. There was a sell-off immediately after the weakness was identified. With just two days to the end of the second quarter of the year as well as the month, the S&P 500 index is on course for its biggest drop since 1970 by half a percentage point.
All three of the Wall Street indexes are also on the course of recording a decline for the second quarter consecutively for the first time after 2015. Analysts said that while the aggressive sell-off would dissipate, it does not seem to be happening soon.
On Tuesday morning, the Conference Board released consumer confidence data, which showed that the index had dropped to its lowest value seen since February last year. Moreover, the near-term expectations have reached the most pessimistic levels seen in a decade. The gap between the ‘current situation’ and the ‘expectations’ components of the Conference Board has been growing and the levels have widened to what they are just before an economic recession.
There was a 1.56% decline in the Dow Jones Industrial Average or of 491.27 points, which saw it close at 30,946.99. A 2.01% decline or loss of 78.56 points in the S&P 500 brought it down to 3,821.55. Meanwhile, there was a 2.98% drop, or that of 343.01 points in the Nasdaq Composite, which brought it to 11,181.54.
Out of the 11 sectors of the S&P 500 index, 10 of them were in the negative territory. The largest percentage loss was recorded in consumer discretionary and the sole gainer was the energy that benefitted from rising crude prices.
According to experts, the sell-off for the day could not entirely be blamed on the data of the Conference Board. There are not many market catalysts for now and the participants are also preparing for the Fourth of July holiday weekend.
Analysts said that one economic data point could not be held responsible for the market volatility because the end of the quarter was approaching and there is a lot of portfolio rebalancing at this time. They said that there may not be a lot of information right now until companies begin reporting their earnings.
While there are a couple of weeks to go before the earnings season begins, pre-announcements have come from 130 of the S&P 500 companies. 77 of these companies have been negative whereas 45 of them have been positive. This brings the positive/negative ratio to 1.7, which is weaker as opposed to a year ago, but stronger than the first quarter.