US stocks cruised to a soft close on Tuesday as the vigil for the non-farm payrolls data and what it could spell for the timing of the next Fed rate hike proved all too consuming for investors.
The S&P 500 market bellwether ended down 0.2% at 2,176 while the S&P Midcap 400 shed 0.1% to 1,568. The S&P Smallcap 600 posted a flat end at 755.
Only buoyant banking stocks, who stand to gain from a US rate hike as soon as September 21 if Friday’s non-farm payrolls are another strong number, were higher.
The S&P 500 banks index climbing 1.3%. The move pushed the industry group’s gains for August to almost 7% as it confirmed its place as the top performer this month on the S&P 500 index.
Although the Federal funds futures still indicates a less than 50% chance of a September hike it is higher than a week ago. Most observers expect a rate hike in 2016.
But the overall market was lower on the worries about a rate hike, as it will mean higher cost of credit.
Also, gold miners are poised for their biggest one-month decline since July 2015 as markets have repriced the timing of the next interest rate rise by the Federal Reserve and dragged on prices of the precious metal.
With just one trading day remaining in August, the NYSE Arca gold miners index, which contains 36 companies including Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM) and Goldcorp Inc (NYSE:GG), is down 15.2% so far this month. That is its biggest drop since July 2015 when the index fell 22.5%.
Barrick Gold Corp closed down 5.3% at $17.42, Newmont down 5.7% at $38.60 and Goldcorp down 5.2% at $15.47.
Although not the greatest immediate record for gold miners the sector has enjoyed a good year so far. Gold miners are up 88.5% so far this year as gold prices have climbed more than 27%.
Midsession
US stocks were lower at midsession on Tuesday as investors began a vigil for the non-farm payrolls data at the end of the week.
The S&P 500 market bellwether was down 0.2% at 2,175.
It was a “legacy” reaction to last week – when the market awaited a speech by Federal Reserve Chair Janet Yellen which, alongside reinforcing comments from her deputy Stanley Fischer, hinted that the jobs data on September 2 could be instrumental in determining the timing of any rate hike.
So a strong August employment report on Friday could mean that rates are hiked on September 21 at the next Federal Open Markets Committee meeting.
Federal funds futures currently imply a 60% chance of a rate rise this year and a 36% chance of a move in September.
The S&P Midcap 400 index was down 0.1% at 1,568 and led by teen retailer Abercrombie & Fitch Company (NYSE:ANF), was poised for its worst day’s trading in nearly eight years as its shares were down 21% to $18.16 after the company posted a wider-than-expected second quarter loss. A soft sales performance due to traffic headwinds at its US flagship and tourist locations stores were primarily responsible for the quarter’s weakness. But it also marked the fourteenth quarterly sales drop for the store group.
In November 2008, at the height of the credit crisis and a month before bank Lehman Brothers collapsed, Abercrombie shares were at $14.64.
The S&P Smallcap 600 was flat at 756.
In a sign that rate hike fears may be creeping up on homebuyers, US home prices cooled for the third straight month in June.
The closely-watched S&P CoreLogic Case-Shiller 20-city index rose 5.13% in June from a year ago, compared with a 5.25% rise in May. Month-on-month, the index slid 0.07% in June, compared with economists’ forecasts for a 0.1% decline.
Open
Wall Street share started on the back foot as traders mull over the Friday jobs report and as the oil price drops.
US crude is down 0.81% to US$46.58 at the time of writing.
The benchmark Dow is down 0.33% to 18,441, while thje S&P500 is 0.285 lower at 2,174.
The tech heavy Nasdaq shed 0.24% to 5,220.
It comes as oil traders remain hopeful for OPEC support, with speculation continuing to talk up wishful thinking that the cartel could reach some kind of agreement to ease oversupply at meetings later this month.
Elsewhere, the sector's cyclical fundamentals have been underlined by a new statistical report which seemingly showed 2015 as really bad year for exploration.
Oil firms found only a tenth of the crude that they would ordinarily discovery in a normal year.
A notebale gainedr was Skyline Medical Inc. (NASDAQ: SKLN) , up 97% on Wall Street, as the developer of a waste fluid disposal system for medical applications, unveiled the signing of a letter of intent to form a new joint venture with a Native American Indian business
Pre-Open
Wall Street shares are seen opening lower on Tuesday after closing higher on Monday as traders get jittery ahead of the key jobs report on Friday.
Last week, Fed chair Janet Yellen hinted at a rise in interest rates on September 21 when she spoke at the Wyoming banker symposium.
The non-farm payroll data could underpin that belief.
Yesterday, the Dow Jones added 0.58%, or 107 points, to 18,502, while the broader S&P500 index gained 0.52%, or 11 points, at 2,180 and the tech heavy Nasdaq added 0.26%, or over 13, to 5,232.
In futures today, the S&P500 is trading down 1.75, while the Nasdaq is down 10.5 points and the Dow Jones Industrial Index shed seven.
In, London, FTSE 100 is drifting lower, having been higher earlier, at 6,842, up just 0.06%.
US crude, which had been lagging after the Fed chair's comments, is up 0.62% to stand at US 47.27 per barrel.
In pre-market Mylan (NASDAQ:MYL) is a notable mover - adding 1.85 after it was widely reported that the group will offer a generic version of the life-saving EpiPen for half the list price of the brand-name treatment.