Risk aversion took center stage on Wall Street Tuesday, driving stocks lower as investors braced for the highly anticipated presidential debate between Vice President Kamala Harris and former President Donald Trump, scheduled for 9 p.m. ET. The market’s mood was clearly cautious, with energy and financial sectors bearing the brunt of the sell-off, underperforming the rest of the market.
Adding to the gloomy outlook, OPEC, the Organization of the Petroleum Exporting Countries, revised its global oil demand growth forecasts downward in its latest monthly report. The group now anticipates 2024 oil demand to increase by 2.03 million barrels per day (bpd), down from its previous estimate of 2.1 million bpd. For 2025, OPEC trimmed its global demand growth forecast to 1.74 million bpd, compared to the earlier projection of 1.78 million bpd. These downward revisions contributed to the energy sector’s decline.
Regulatory developments also weighed heavily on the financial sector. Federal Reserve Board Vice Chair for Supervision Michael Barr announced adjustments to the BASEL III and GSIB (Global Systemically Important Banks) surcharge proposals, which will now increase capital requirements for the largest banks by 9%, down from the original plan of 19%. While Barr clarified that banks with assets under $250 billion would largely be exempt from these heightened requirements, financial stocks nevertheless tumbled across the board. The financial sector gauge plunged 2%, with JPMorgan Chase & Co. JPM dropping 7%. The SPDR Regional Banking ETF KRE declined 2.6%, reflecting ongoing pressure even on the regional bank industry, which is largely exempted from the new regulations.
In a contrasting trend, Treasuries continued their rally, signaling a flight to safety. The iShares 20+ Year Treasury Bond ETF TLT rose 0.6%, hitting its highest levels since late July 2023. The Japanese yen also gained 0.5%, suggesting a preference for safe-haven assets. Gold and Bitcoin BTC/USD traded broadly flat, indicating a mixed sentiment in alternative assets.
Major Indices Price 1-day %chg Nasdaq 100 18,667.20 0.0% S&P 500 5,458.25 -0.2% Dow Jones 40,509.61 -0.8% Russell 2000 2,081.31 -1.0%
According to Benzinga Pro data: The SPDR S&P 500 ETF Trust SPY was 0.2% lower to $545.43. The SPDR Dow Jones Industrial Average DIA fell 0.6% to $406.46. The tech-heavy Invesco QQQ Trust Series QQQ inched 0.1% higher to $454.91. The iShares Russell 2000 ETF IWM fell 1% to $206.36. The Real Estate Select Sector SPDR Fund XLRE outperformed, up 0.8%. The Energy Select Sector SPDR Fund XLE and the Financials Select Sector SPDR Fund XLF were the laggards, down 2.1% and 1.9%, respectively.
Worst-performing energy stocks were Diamondback Energy, Inc. FANG, APA Corporation APA and Exxon Mobil Corporation XOM, down 5.1%, 5% and 3.4%, respectively. Hewlett Packard Enterprise Company HPE fell over 7% as the company announced it has commenced a public offering of $1.35 billion (27 million shares) of Series C mandatory convertible preferred stock. Oracle Corp. ORCL rallied 12% on the back of stronger-than-expected quarterly results. Other stocks reacting to earnings were Rubrik Inc. RBRK down 5.8% and Academy Sports and Outdoors Inc. ASO up 5.68%. GameStop Corp. GME will report earnings after the close.
The market’s direction will likely remain influenced by the upcoming presidential debate, investor sentiment, and any further economic or geopolitical developments.
