Wall Street recovers part of early losses, still ends day lower
- Energy stocks hit by sharp crude oil fall on Tuesday.
- GE extends losses to record its biggest 2-day drop in 8 years.
- Hopes of Senate repealing Obamacare allows a late recovery.
Major equity indexes in the U.S. started the day on a negative note on Tuesday and stretched their losses before staging a modest recovery in the last couple of hours of the session.
The barrel of West Texas Intermediate fell more than 2.5% today as the rising crude oil production in the U.S. and forecasts of a slower growth in global demand offset the positive impact of OPEC production cut extension and expectations and the tension in the middle east. Moreover, GE shares recorded heavy losses for the second straight day amid investors' disappointment over the new business strategy the company was adopting. The S&P 500 Energy Sector (SPNY) closed the day with a loss of 1.5%.
Later in the session, comments from Republican Senators revived hopes of the corporate tax cut not being delayed until 2019. "We’re optimistic that inserting the individual mandate repeal would be helpful,” the majority leader Senator Mitch McConnell of Kentucky told reporters." According to the Congressional Budget Office, repealing of Obamacare would free up more than $300 billion over a decade, which would allow Republicans to legalize the tax bill without the support of Democrats as it would add less than $1.5 trillion to the Federal debt.
On the other hand, speaking at an economic forum in Montgomery, Alabama, Atlanta Fed President Raphael Bostic reiterated that he was in favor of raising rates gradually over the next couple years. “There are no catalysts at the moment, while there are concerns that the Federal Reserve is going to get more ammunition to move higher with interest rates,” Jeff Zipper, managing director for investments at Private Client Reserve at U.S. Bank in Palm Beach, Florida, told Reuters.
The Dow Jones Industrial Average lost 29.76 points, or 0.13%, to 23,409.94, the S&P 500 dropped 6.02 points, or 0.23%, to 2,578.82 and the Nasdaq Composite fell 20.19 points, or 0.3%, to 6,737.41.
Headlines from the NA session
- Senate plans to end Obamacare mandate to make room for tax cuts - NY Times
- Market wrap: risk-averse mood permeated US markets overnight - Westpac
- Fed's Bostic: Flattening yield curve may signal more confidence in US economy
- US commerce chief Ross: Will be difficult for TPP 11 countries to finalize an agreement
- Fed's Bostic: Appropriate to raise rates gradually over next couple years
- US PPI: Inflation accelerates at the start of Q4 - Wells Fargo
- Mohamed El-Erian to become Fed No2? - WSJ
- US: Small business optimism rebounds in October - Wells Fargo
- Fed's Bullard: Current interest rate level likely to remain appropriate over near-term
- US: PPI for final demand rises 0.4% in October