US close: Stocks finish weaker after poor batch of data

dl new york city nyc ny us usa united states of america manhattan skyline city finance trading nyse dow jones sp dollar dollars usd federal reserve fed — Sharecast photo / Josh White

Wall Street's main market gauges closed in the red on Tuesday, after a batch of much weaker-than-expected economic data was released.

The Dow Jones Industrial Average was down 0.47% at 32,909.59, as the S&P 500 lost 0.22% to 4,128.73 and the Nasdaq Composite was off 0.002% at 12,381.30.

“While fear of economic collapse has been centred upon Europe, this afternoon has seen the US economy in the limelight as services activity crashed to the lowest level since May 2020,” said IG senior market analyst Joshua Mahony.

“Easing inflation data and improved retail sales numbers had provided a false sense of security for some but today's PMI and new home sales data has served to highlight the struggles ahead for US businesses.”

On the economic front, S&P Global's preliminary business activity index for the US services sector slumped unexpectedly to a reading of 44.1 for August.

That was down from a reading of 47.3 in June and much weaker than economists' forecasts for a rebound to 50.2.

A similar downside surprise one month before had contributed to much talk around imminent recession risks before being contradicted by the results of other more closely-followed surveys.

New home sales data for July meanwhile delivered another large negative surprise on Tuesday, revealing a drop in sales to below their level from before the pandemic.

According to the Commerce Department, the annualised pace of new home sales fell at a month-on-month pace of 12.6% in July to reach 511,000, compared to consensus forecasts for 580,000.

Investors were also digesting a decline in the Federal Reserve Bank of Richmond's regional manufacturing sector survey from 0 in July to -8 for August.

In equities, Zoom Video Communications tumbled 16.54% after the video calling giant reported challenges around subscription growth and the strong dollar.

On the upside, department store chain Macy’s added 3.76% after better-than-expected second-quarter earnings, even as it lowered its full-year guidance amid high levels of inventory.

Reporting by Josh White at Sharecast.com. Additional reporting by Alexander Bueso.

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