Tuesday's ADP miss and softer confidence data pushed Treasury yields lower. Oil dropped 4% on Middle East optimism. All eyes on the Fed decision Wednesday and Big Tech earnings.
Tuesday’s economic data ran softer than expected. Private payrolls rose by just 15,000 in the ADP count, below the 16,500 estimate and marking the fifth straight month of slowing job growth. Wholesale inventories missed forecasts. The trade deficit remained elevated as both imports and exports declined. Consumer confidence slid. Consumers’ own inflation expectations also fell. The Richmond Fed manufacturing index contracted. Treasury yields moved lower across the curve. The 10-year yield dropped about five basis points. Market pricing shifted: the probability of another rate hike slipped to 31% from nearly 40% a week ago.
Housing data provided a rare bright spot. The Case-Shiller home price index beat expectations. After adjusting for inflation, prices remained lower than a year ago.
The dollar finished mixed in quiet trading. It gained against the Japanese yen and the British pound. It slipped against the euro and the Canadian dollar. The Australian dollar and Swiss franc also lost ground. For broader perspective, read our forex market analysis.
Oil prices tumbled on optimism about the Middle East. WTI crude traded near $93 a barrel last week. Tuesday it fell as low as $77.78 and settled at $79.26, a drop of 4.06%. Reports emerged that the United States and Iran are moving closer to an agreement that could ease tensions over the Strait of Hormuz. Diplomats from Pakistan and Egypt are reportedly working on a framework for shipping through the strait. The White House is expected to wait until after President Trump’s meeting with Israeli Prime Minister Benjamin Netanyahu before deciding on next steps.
U.S. equities finished mixed. The Dow rose on gains in industrial and value stocks. The broader market was held back by another round of selling in AI and semiconductor shares. The rotation out of mega-cap technology continued.
The next two days bring two major catalysts. The Federal Reserve announces its policy decision Wednesday at 2 p.m. ET. Chair Kevin Warsh’s press conference will be the focus. Markets expect no rate change, but the statement and Warsh’s tone could shift expectations for the rest of the year.
Earnings also dominate the calendar. Microsoft MSFT stock page and Meta report after the close. Procter & Gamble PG stock page reports in the morning, offering a read on consumer spending and pricing. Qualcomm follows after the bell, providing insight into smartphone and semiconductor demand. Apple and Amazon report Thursday.
On AlphaScala’s proprietary scale, Microsoft carries an Alpha Score of 59 out of 100, reflecting moderate sentiment ahead of its print. Procter & Gamble scores 56, also in the moderate range.
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