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(CercleFinance.com) – The New York Stock Exchange took a breather on Tuesday, trading without much change despite the Dow Jones once again reaching records after the historic peaks of the last few days.
At the end of the morning, the Dow index rose 0.3% to 42,246.5 points, after having earlier recorded a new absolute high of 42,246.9 points, while the Nasdaq Composite fell 0.1% to 17,961.4 points.
Investors appear tempted to take some profits following the rally of the last two weeks, which has led the Dow and the S&P 500 to set record highs.
The recent bull run was triggered by reassuring inflation figures, solid economic indicators and a 50-point rate cut by the Fed, which reinforced the scenario of a ‘soft landing’ for growth.
The implementation of a stimulus plan to boost the Chinese economy, the details of which were unveiled overnight, failed to revive risk appetite, although the slowdown in the world’s second-largest economy was a cause for concern for markets.
In the absence of major macroeconomic news, markets are digesting their recent gains and appear somewhat disoriented, providing an opportunity to take profits ahead of a busier weekend.
Published this morning, the Conference Board’s consumer confidence index unexpectedly deteriorated in September, which seems to support the scenario of a slowdown in activity.
Its confidence index fell to 98.7, from 105.6 in August, while economists had expected it to improve to 104, after 103.3 in the first reading. This is its sharpest decline in three years.
The speakers also seem reluctant to commit too much before the inflation figures due on Friday.
Investors are also waiting for the corporate earnings season, which begins in three weeks, to determine whether the current high valuations are justified.
For many strategists, it will be difficult to go much higher if there are no pleasant surprises on the corporate earnings front.
The S&P 500 is currently trading at 24 times forward earnings, up from 21.7x a year earlier.
From a sectoral point of view, the raw materials sector posted by far the best performance at the start of the day (+1.5%), driven by hopes surrounding China.
The energy sector is also doing well (+0.2%) while hopes for the development of the economic situation in China are supporting oil prices.
On the NYMEX, American light crude (West Texas Intermediate, WTI) climbed 1.8% to more than 71.6 dollars.
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