U.S. stocks on Tuesday struggled for momentum, as market participants parsed economic data out of Europe and on the domestic front.
The tech-heavy Nasdaq Composite (COMP.IND) was up 0.28% to 11,498.89 points in morning trade. The benchmark S&P 500 (SP500) was 0.12% higher to 3,986.86 points, while the blue-chip Dow (DJI) retreated 0.26% to 32,803.29 points.
Of the 11 S&P sectors, six were trading in the green, led by Real Estate and Materials. Utilities and Health Care topped the losers.
Wall Street’s major indices are attempting to buck a historical trend of a negative end to the month of February.
“Since Nov.’21, the last trading day of the month has been up 4 times, and down 11, for an average return of -0.30%,” BTIG technical strategist Jonathan Krinsky said. “All of the up days, however, have been +1.42% or more.”
“We haven’t had back-to-back positive last days of the month during this stretch, and January was +1.46%. The last day of February has historically been bearish, and has been down eight straight years (avg. -0.54%), and 10 of the last 11,” Krinsky added.
Earlier in the day, hotter-than-expected inflation reports from both France and Spain strengthened the case for further rate increases by Europe’s central bank. The situation mirrors that across the Atlantic somewhat, as U.S. economic data throughout February has also put pressure on the Federal Reserve to stick to its rate hikes while testing Fed chief Jerome Powell’s comments that a “disinflationary process” had started.
On the domestic front, the February Chicago purchasing managers index unexpected fell to 43.6, compared to a forecast for a small rise to 45. Meanwhile, the Conference Board’s measure of consumer confidence in February also surprisingly fell to 102.9, versus an anticipated rise to 108.5. Furthermore, the Richmond Fed manufacturing index slipped to -16 in February.
“The second straight fall in the consumer confidence index contrasts with the improvements in the University of Michigan and TIPPOnline surveys. It’s hard to be sure what is driving these contrasting signals, but we think it partly reflects the greater weighting on perceptions of the labor market in the Conference Board survey,” Pantheon Macro’s Kieran Clancy said.
“The Chicago PMI tends to lags changes in civilian aircraft orders—Boeing’s headquarters are in Chicago—which jumped towards the end of last year, but fell sharply in January. Together with the fall in the Richmond Fed manufacturing index … we are marking down our forecast for the ISM manufacturing index, due tomorrow, to 48.0 from 48.5,” Clancy added.
There was also housing data in the form of the S&P CoreLogic Case-Shiller house price index for December, which fell to an annual rate of 4.6%, below the consensus of 5.8%. Additionally, the FHFA house price index for December dipped 0.1%.
Turning to the fixed income markets, yields were mixed. The 10-year Treasury yield (US10Y) was up 1 basis point to 3.93%, while the 2-year yield (US2Y) was flat at 4.79%.
Among active stocks, Norwegian Cruise Line (NCLH) slumped and was the top percentage loser on the S&P 500 (SP500) after posting a wider than expected quarterly loss.
Retail giant Target (TGT) was higher after topping comparable sales expectations.