By Yasin Ebrahim
Investing.com — The Dow fell Tuesday, as energy stocks wobbled on falling oil prices and financials ran out of steam ahead of the inflation report due Wednesday.
The Dow Jones Industrial Average fell 0.63%, or 197 points, the Nasdaq fell 0.94%, and the S&P 500 fell 0.88%.
Energy stocks fell 2% after the Organization of the Petroleum Exporting Countries flagged fresh demand concerns, forecasting oil demand to rise at a slower pace in 2023. The downbeat forecast added to concerns that oil demand will remain in the crosshairs as global economic recession fears mount.
Financials gave up gains even as banking stocks climbed on bets that second-quarter results from major Wall Street banks due this week may not be as bad as feared.
Growing worries about a recession had soured investor sentiment on banks recently, but “2Q results should be solid/strong as should the outlook as it’s too early for banks to build meaningful loan loss reserves for a potential US recession,” Deutsche Bank said in a note.
JPMorgan (NYSE:JPM) kicks off the quarterly earnings season in earnest on Thursday, followed by Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) on Friday.
The gains for bank stocks come against a backdrop of falling Treasury yields, a drag on bank stocks, though many point to the inflation data due tomorrow that could cement bets on the Federal Reserve hiking rates by 0.75% again this month.
“We expect still-strong 0.5% m-o-m core CPI inflation in June, setting up another 75bp hike at the July FOMC meeting; inflation expectations data bear monitoring,” Nomura said ahead of the consumer price index data due Wednesday.
In big tech, meanwhile, Microsoft (NASDAQ:MSFT) was the biggest loser falling 4% after the tech giant announced jobs cuts that would affect less than 1% of the company.
The job cuts come just as tech research firm Gartner (NYSE:IT) reported that PC shipments fell 13% in the third quarter, stoking doubts about the strength of demand for Microsoft’s Windows operating system segment.
Twitter (NYSE:TWTR), meanwhile, rose more than 4% to claw back some of its recent losses after it said Elon Musk’s allegations that it had breached the terms of its $44 billion deal were “invalid and wrongful.”
Twitter is likely to “go head to head against Musk in a Game of Thrones court battle to recoup the deal and/or the breakup fee of $1 billion at a minimum,” according to research firm Wedbush.
On the earnings front, PepsiCo (NASDAQ:PEP) gave up gains to end the day lower despite raising its full-year guidance after quarterly results topped Wall Street estimates.
Boeing (NYSE:BA), meanwhile, reported that it delivered 51 airplanes in June, topping the 50 milestone for the first time since March 2019. Its shares rose more than 7%.
In other news, Peloton Interactive (NASDAQ:PTON) said it would outsource in-house manufacturing to Taiwan to cut costs and simplify its supply-chain structure at a time when the fitness-equipment maker is facing waning demand.