Market Snapshot: Dow falls 400 points as weak economic data undermine confidence

U.S. stocks rose on Tuesday, finding support after China moved to ease some COVID-19 restrictions, though worries about both inflation and the threat of recession were seen limiting gains.

What’s happening

The Dow Jones Industrial Average

rose 150 points, or 0.5%, to 31,589.

The S&P 500

gained 12 points, or 0.3%, to trade at 3,911.

The Nasdaq Composite

fell 19 points, or 0.2%, to 11,506.

On Monday, major indexes drifted to a modestly lower close. The S&P 500, which has slid into a bear market, is down 18% year to date,

What’s driving markets

Global equities, particularly travel stocks, got a lift Tuesday, with analysts tying support to moves by the Chinese government, which said it would shorten the quarantine time for international travelers and those who have come into close contact with COVID-19 patients to 10 days from 21 days.

Beijing will also loosen its testing requirements for people in quarantine.

Also, six of the biggest U.S. banks said they have enough capital to either maintain or hike their dividends to shareholders after setting enough aside to handle the most extreme economic conditions expected in the coming year.

Wells Fargo & Co.

and Goldman Sachs Group Inc.

both increased their payouts by 20%, while Morgan Stanley

delivered an 11% rise. Bank of America Corp.

increased its dividend by 5%, while Citigroup Inc.

and JPMorgan Chase & Co.

held their dividend flat.

“U.S. stocks are rallying after several banks boosted their dividends and China pivoted away from their strict COVID policy,” said Edward Moya, analyst at Oanda, in a note. “Wall Street seems to be close to figuring out how high central banks may take rates over in the short-term and that is supportive for long-term investors to scale into positions.”

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U.S. stocks were weighed down on Monday after a rise in bond yields. Analysts had been anticipating that month and quarter end rebalancing of portfolios would be supportive of stocks this week, though doubts over the durability of the bounce off recent lows remain.

“It is difficult to draw any concrete conclusions so close to quarter end, when rebalancing flows are muddying the waters,” said Marios Hadjikyriacos, senior investment analyst at XM.

The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose 2.9 basis points to 3.222%. Yields and debt prices move opposite each other.

New York Fed President John Williams, in a television interview, said he expected the U.S. economy would see a slowdown but not a recession as the central bank aggressively tightens monetary policy in an effort to rein in inflation. Williams said he expected policy makers to debate whether to hike rates by another 50 or 75 basis points when they meet in July, after delivering a 75 basis point increase this month — the largest since 1994.

Data showed the U.S. trade deficit in goods narrowed by 2.2% in May to $104.3 billion.

The S&P CoreLogic Case-Shiller 20-city index posted a 21.2% year-over-year gain in April, up slightly from 21.1% in the previous month. In April, the 20-month index rose a seasonally adjusted 2.3%. A separate report from the Federal Housing Finance Agency showed a 1.6% monthly gain. And over the last year, the FHFA index was up 18.8%.

The Conference Board’s consumer-confidence index dropped in June to a 16-month low of 98.7, as Americans grew more worried about high gas and food prices and the health of the economy. Economists polled by The Wall Street Journal had forecast the index to drop to 100 from a revised 103.2 in May.

Companies in focus

Nike Inc. NKE shares fell 4% after the apparel maker beat earnings estimates but was cautious on margins and on China in particular. But Chinese stocks advanced after a loosening of quarantine requirements in the world’s second-largest economy.

JetBlue Airways Corp.

once again raised its offer for discount carrier Spirit Airways Inc.

as it attempts to outbid rival Frontier Group Holdings Inc.
JetBlue shares rose 3.3%, Spirit shares gained 2.6% and Frontier shares were up 3% amid a positive tone across the airline sector. The popular U.S. Global Jets ETF

rose 3.5%.

Other assets

The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, rose 0.5%.


was up 0.5% near $20.850.

Oil futures rose, with the U.S. benchmark

up 0.6% above $110 a barrel. Gold futures

were little changed near $1,825 an ounce.

The Stoxx Europe 600

rose 0.7%, while London’s FTSE 100

advanced 1.3%.

The Shanghai Composite

and Hong Kong’s Hang Seng Index

each ended 0.9% higher, while Japan’s Nikkei 225

rose 0.7%.

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