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The S&P 500 Index closed down -0.49% on Tuesday, alongside the Dow Jones Industrials Index down -0.14% and Nasdaq 100 Index down -0.73%. Disappointing US services activity was a contributing factor, with the July ISM services index unexpectedly falling to 50.1, below expectations of 51.5, while the prices paid sub-index rose to a 2.75-year high of 69.9.
In trade data, the US trade deficit for June narrowed to -$60.2 billion from -$71.7 billion in May, better than expectations of -$61 billion. Federal funds futures reflect a 94% chance of a 25 basis point Fed rate cut at the September FOMC meeting, indicating growing market speculation on potential rate reductions due to softening economic indicators.
Over 67% of S&P 500 firms have reported Q2 earnings with an overall rise of +9.1%, significantly exceeding pre-season expectations. Prominent stock movements included Palantir Technologies rising over +7% after strong earnings, while Inspire Medical Systems and Gartner fell by more than -34% and -27% respectively due to lowered revenue forecasts.
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