On Tuesday, the S&P 500 index and the Dow clipped gains as financial stocks were pressured down by feeble services data. The U.S. economy’s service sector advanced in August but at a slower rate than in July, and the decline from the previous month was the biggest since the 2008 financial crisis, a report by the Institute for Supply Management (ISM) displayed.
The report follows Friday’s weaker-than-anticipated employment data, which heightened doubts about the health of the economy and its ability to captivate an interest rate hike in the near future. Federal Reserve Chair Janet Yellen commented in August that the case for higher rates had strengthened, citing a robust labor market.
Though, the recent flood of feeble data can prevent the Fed from pulling the trigger anytime this year.
“In the last week alone, every major data point has missed estimates and that raises some major questions of what the Fed’s next move is going to be,” stated Adam Sarhan, CEO at Sarhan Capital.
“The market is asking the Fed where its hawkish data to support a rate hike is coming from.”
The possibility of a rate hike in September fell to 15 percent from 21 percent following the ISM data. Those odds dropped to 46.9 percent from 50.6 percent for December, reported by CME Group’s FedWatch tool. The dollar index declined by the most since July 29.
Tuesday mid-morning, the Dow Jones Industrial Average dropped 11.37 points, or 0.06 percent, at 18,480.59. The S&P 500 fell 1.09 points, or 0.05 percent, at 2,178.89. The Nasdaq Composite advanced 9.69 points, or 0.18 percent, at 5,259.59. Five of the 10 major S&P 500 indexes were lower, with financials being the worst performer. Declining issues outnumbered advancing ones on the NYSE by 1,432 to 1,411. On the Nasdaq, 1,369 issues dropped and 1,349 increased. The S&P 500 index displayed 31 new 52-week highs and no new lows, while the Nasdaq recorded 127 new highs and 14 new lows.