U.S. equities experienced a turbulent session on Tuesday, with the Nasdaq Composite recovering more than half of its early losses by midday, buoyed by a sharp rally in Apple Inc. (NASDAQ:AAPL). However, the market's advance remained narrow, as most stocks continued to decline, reflecting persistent concerns over rising oil prices and elevated bond yields.
Market Overview
As of 12:00 EDT, the Nasdaq Composite was down 0.48% at 26,243.43, a significant improvement from its opening drop of 1.29%. The index even managed to gain 0.24% during the final hour of morning trading. Meanwhile, the S&P 500 fell 0.34% to 7,660.16, and the Dow Jones Industrial Average slipped 0.40%, showing little change after 11:00 EDT.
Apple's shares climbed 3.01% after the company named John Ternus as its new chief executive, effective Tuesday. This move provided crucial support to the tech-heavy Nasdaq. NVIDIA Corporation (NASDAQ:NVDA) also pared its losses to just 0.18%, offering additional relief.
Breadth Remains Thin
Despite the recovery in major indices, market breadth stayed weak. The Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP) edged down 0.06% in the last hour, while the equal-weight S&P 500 proxy declined 0.57% for the session. This suggests that gains were concentrated in a few large-cap names, while the broader market continued to struggle.
Defensive sectors led the way, with consumer staples (XLP) up 0.94%, health care (XLV) gaining 0.51%, and utilities (XLU) adding 0.44%. In contrast, cyclical sectors such as industrials (XLI) and consumer discretionary (XLY) both fell approximately 1.17%, while technology (XLK) dropped 1.02%.
Oil and Yields Weigh
Rising crude prices and higher Treasury yields continued to cap gains. West Texas Intermediate (WTI) crude traded at $88.32, up 2.99%, while Brent crude rose 2.38% to $92.64. The 10-year Treasury yield held steady at 4.768%.
The energy shock stems from geopolitical tensions, with the Associated Press reporting that about 20% of the world's oil typically passes through the Strait of Hormuz. The conflict between the U.S. and Iran had largely shut down this vital passage, adding to supply concerns.
Economic Data
New factory figures reinforced these worries. The ISM prices index remained at 71.1, indicating elevated input costs. Susan Spence, chair of the ISM survey, noted, "The Manufacturing PMI registered 54.6 percent in August, 1 percentage point below the July figure."
Labor demand stayed subdued, with July job openings at 7.3 million, showing minimal movement. Hires and separations were both close to 5.1 million, suggesting a stable but unremarkable job market.
Stock Movers
Advanced Micro Devices, Inc. (NASDAQ:AMD) was still off 2.33% by midday, while Axon Enterprise, Inc. (NASDAQ:AXON) dropped 9.35%, ranking among the top decliners on the S&P 500.
Outlook
The upcoming employment report on Friday is the next significant gauge for investors. The Federal Reserve faces a decision between resilient factory prices and stable labor demand. This combination kept long-term yields near 4.8% on Tuesday.
Risks remain tilted to the downside: a renewed surge in oil prices or yields could halt the technology sector's recovery. For a sustained market shift, broader participation is needed, extending beyond just the leading stocks.
