4:12pm: Gold back above $2,400
The three major US indexes were little changed at Tuesday’s closing bell despite comments from Fed chair Powell that bringing inflation down to the central bank’s 2% target is “taking longer than expected.”
The Dow Jones had added 0.2% at 37,799 points, while the S&P 500 shed 0.2% at 5,051 points and the Nasdaq was 0.1% lower at 15,865 points.
Gold moved higher, back above $2,400 per ounce closing in once again on its record high price of about $2,430.
3pm: US markets shrug off concerns
While European markets finished resoundingly in the red, with London's FTSE 100 falling 1.8% and Germany's DAX 1.4%, the main US indices are mainly higher, apart from the small caps of the Russell 2000.
Gains of 0.2% for the S&P 500 and Nasdaq are not much to write home about, says Fawad Razaqzada, market analyst at City Index.
"Although off their best levels, US and global stock indices remained largely out of favour. Investors have shunned risk in recent weeks following the record-setting performance of the markets in the previous 5 months to April," he said.
"Concerns over the escalation of the situation in the Middle East is at the forefront of investors’ minds. The situation remains volatile with Israel seeking revenge for Iran’s retaliatory attacks on Saturday."
On top of this, he says, investors are becoming "increasingly" worried about the rising yields on benchmark government bonds, as the odds of a June rate cut by the Fed diminish.
"After starting the year by pricing in something like six rate cuts for 2024, traders are now not even sure they will get 50 basis points by December."
Ballooning government debt and rising cost of financing the debt is becoming "a major source of concern", he noted.
The International Monetary Fund was at it today, criticising US policymakers for unsustainable fiscal policies driving the nation's recent economic success.
While acknowledging its impressive performance, the IMF warned of excessive spending, risking inflation and global financial instability. Such actions, it cautioned, could elevate global funding costs, threatening long-term fiscal and financial health worldwide.
"The above macro factors, as well as profit-taking by investors have caused the major indices to start breaking down some key technical levels, much to the excitement of the bears," Razaqzada said.
2.15pm: Fed's Powell speaks, stocks spike
US stock markets are in the green despite hopes of summer interest rate cuts getting further dashed by US Federal Reserve chair Jerome Powell, who said it is likely to take “longer than expected” for inflation to return to the Federal Open Market Committee’s 2% target.
"More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal," Powell said, speaking as part of a panel at a US-Canada economic policy forum.
"We’ve said at the FOMC that we’ll need greater confidence that inflation is moving sustainably toward 2% before it would be appropriate to ease policy."
He said recent inflation data has "clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence".
Powell said that until inflation shows more progress in returning to the target, the FOMC can maintain current rates "for as long as needed".
12.05pm: Mixed markets
It's a distinctly mixed stock market so far in New York, with UnitedHealth leading the Dow Jones, which remains the only one of the main US indexes to remain in positive territory so far.
The S&P 500 and Nasdaq have been battling in and out of the red but are both down slightly, just below 0.2%.
Of the biggest names in the S&P list, its about half and half, with Apple, Tesla, JPMorgan Chase and Johnson & Johnson (NYSE:JNJ) among those trading lower, while Microsoft, Nvidia, UnitedHealth and Salesforce are among the risers.
The general risk-off feeling in stock markets comes as investors await the Israeli response to Iran's attacks, says Chris Beauchamp, chief market analyst at IG, with most European indexes deep in the red.
"It has been another tough day for global markets, and limited gains in the US are disappearing as traders continue to derisk thanks to the ongoing uncertainty in the Middle East.
"The threat of an Israeli response to Iran’s attacks on Saturday, and yesterday’s strong US retail sales data, remain the drivers of the declines."
"Investors had become used to a steady drift higher in recent months, and had written off the indecision of March and April as a digestion of the gains before another leg higher.
"But ultimately, such pullbacks as we are seeing now are a common occurrence. We have moved swiftly from ‘greed’ to ‘fear’, but such drops give investors the chance to jump on board the rally at better levels than would be the case otherwise."
9.57am: Dow Jones opens up as Nasdaq and S&P 500 slip
The Dow Jones was alone in enjoying a positive start on Tuesday, climbing 90 points to 37,825, as the S&P 500 and Nasdaq both fell early on.
The S&P 500 dipped 10 points to 5,051 as the markets opened, while the Nasdaq fell 30 points to 15,854.
Analysts had warned of volatile trading following Israel’s overnight comments that it would respond to a weekend attack by Iran.
Scope Markets analyst Joshua Mahony pointed to “shaky” sentiment on the back of tensions in the Middle East.
“Increased concerns that the Federal Reserve may opt to maintain interest rates at the current levels for some time yet,” were adding to this, he said, with the chair Jerome Powell due to provide commentary today.
Elsewhere among companies, UnitedHealth Group Inc (NYSE:UNH, ETR:UNH) topped the early risers after beating revenue expectations for the first quarter and posting a smaller-than-anticipated hit from a cyberattack.
Live Nation Entertainment Inc (NYSE:LYV) sunk in the meantime, following reports the US Department of Justice could be preparing to file a lawsuit over alleged abuse of its dominant market position in ticket sales.
8.57am: Big day for banking sector
There are some more big earning reports out before the opening bell from the banking sector, with both Bank of America Corp (NYSE:BAC) and Morgan Stanley (NYSE:MS) following most of their peers by beating Wall Street's expectations.
However, while BofA's first-quarter earnings fell less than expected, shares dipped into the red in pre-market trading.
The Charlotte-headquartered lender reported an 18% fall in net income to $6.7 billion for the first three months of 2024, on revenue down 2% to $25.8 billion.
CEO Brian Moynihan hailed a rebound in investment banking and record revenue from wealth management team.
Later in the morning, MS earnings also beat expectations in the first set of results under new CEO Ted Pick, who benefited from a record quarter for wealth management.
Total net revenues of $15.1 billion were up 4% on a year ago and ahead of the $14.5 billion Street forecast, while EPS of $2.02 was up 19% on a year earlier and beat the $1.67 average estimate.
"Institutional securities also saw strength across the markets and underwriting businesses," Pick said, adding that the firrm's integrated model is "delivering durable results".
7am: Mixed start expected: Dow up, Nasdaq down
Dow Jones futures were up 117 points at 38,110 on Tuesday as the opening bell looked like bringing mixed fortunes for markets following some sharp falls at the start of the week.
Futures for the Nasdaq 100 were 22 points lower at 17,854 in the meantime, while the S&P 500 was set to open 3 points down at 5,101.
“Markets have grown increasingly concerned that the events in the Middle East could spark a fresh bout of inflation, thus setting back the expected pathway for interest rates,” Scope Markets analyst Joshua Mahony commented.
That said, commentary due today from the Federal Reserve’s Jerome Powell and Bank of England’s Andrew Bailey could prompt further volatility later, he added.
Among companies, Tesla Inc (NASDAQ:TSLA) was off 2% in pre-market trading as Monday’s news of sweeping job cuts looked to continue hitting sentiment.
A positive start to the day looked in store for Telefonaktiebolaget LM Ericsson though, which jumped 5% ahead of the markets’ open on a first quarter earnings beat.