US close: Stocks fall on gloomy data, but oil prices jump

(Sharecast News) - US markets finished with moderate losses on Tuesday, with the S&P 500 pulling back from a one-month high as investors returned to their desks after the Labor Day holiday with a risk-off approach. Weak economic data from around the world dampened sentiment during the trading session, while a surprise oil production cut by Saudi Arabia and Russia sent crude prices to their highest level this year.

The Dow fell 196 points (-0.6%) to 34,642, the Nasdaq edged 11 points lower (-0.1%) to 14,021, while the S&P 500 declined 19 points (-0.4%) to 4,497, as it pulled back from a one-month high registered on Friday before the long weekend.

The S&P 500 closed Friday's session at 4,516, its highest finish since 7 August, after the all-important non-farm payrolls report raised hopes that the Federal Reserve will hold off from tightening monetary policy any further at its next meeting.

Cementing hopes further on Tuesday were comments from Fed governor Christopher Waller, a well-known hawk, who said the central bank "can proceed carefully" after recent improvements in data. "There is nothing that is saying we need to do anything imminent, anytime soon, so we can just sit there [and] wait for the data," Waller said.

In other news, oil prices surged after Saudi Arabia and Russia extended voluntary production cuts until the end of the year in an attempt to tighten markets and keep prices elevated. Brent crude hit a high of $91.15 a barrel during the trading session, its highest price since November 2022, before settling at $90.04, up 1.2% on the day.

"Oil prices have rallied as traders have gotten the message loud and clear that OPEC+ is not in the mood to ease supply anytime soon," said Naeem Aslam, chief investment officer at Zaye Capital Markets.

Economic picture remains mixed

In China, the Caixin/S&P services purchasing managers' index (PMI) fell to an eight-month low of 51.8 in August from 54.1 in July, below consensus expectations of 53.0.

Meanwhile, S&P's Eurozone composite PMI slipped for the fourth straight month to a 33-month low of 46.7 in August, from 48.6 in July, below consensus estimates and the flash reading of 47.0.

Meanwhile, US factory orders fell 2.1% in July, according to the Commerce Department, after four straight months of gains. However, analysts were forecasting a bigger fall of 2.3%.

In more positive news, Goldman Sachs said that the likelihood of the US economy falling into recession over the next year has dropped to just 15%, down from a prediction of 20% in July and 35% in March.

Stock movers

Disney finished lower after the entertainment giant pressed customers of Spectrum cable to switch to its Hulu live TV channel, as its disagreement over distribution with Spectrum's parent company Charter Communications continues. Disney removed EPSN and ABC from Spectrum's cable service last Thursday.

Warner Bros Discovery closed with small gains despite the negative news that full-year EBITDA could be between $300-500m lower as operations continue to be impacted by the ongoing writers strikes.

Airbnb and Blackstone were on the rise after it was announced that both stocks will be included in the S&P 500 when the quarterly rebalancing of the index happens on 18 September. Other changes include Deere replacing Walgreens Boots Alliance on the S&P 100.