By Dhirendra Tripathi
Investing.com — Stocks, particularly in the tech sector, slumped on Tuesday on weak consumer confidence data and rising yields on U.S. Treasury debt.
The confidence reading for this month unexpectedly fell to its lowest level since February as consumers felt jolted by another surge in the Covid-19 pandemic that struck fear over the economy’s recovery. Stocks were in the red heading into the last half-hour of trading.
At the same time, lawmakers in Washington are haggling over the country’s own debt future, at loggerheads over whether to extend funding beyond Thursday and raise or suspend the debt limit. The prospect of a U.S. default, plus higher taxes to pay for trillions of dollars in proposed federal spending, is also weighing on sentiment.
The reading, coupled with a rising trade deficit and an expected decline in vehicle sales, brewed fresh concerns about the state of consumption in the country, which is a key driver of economic growth.
The United States 10-Year Treasury yield jumped to about 1.56%, hammering tech and growth stocks, while investors fled for value stocks. The Federal Reserve is preparing to ease off of its stimulus efforts, first cutting back on its monthly bond purchases starting later this year, and potentially raising short-term rates later next year.
Still, on Tuesday in testimony to the Senate Banking Committee, Fed Chair Jerome Powell said the U.S. economy is far from achieving maximum employment.
Here are three things that could affect markets tomorrow:
1. Washington showdown
Congress has to figure out how to extend federal government funding past Thursday at midnight or agencies could shut down, risking a U.S. default, several policy experts and executives warned. On Monday night Republicans in the Senate quashed an effort to both extend funding to December and suspend the nation’s debt limit to next year. Now Democrats will have to scramble to get something delivered.
2. Pending home sales
The National Association of Realtors will Wednesday release data on pending home sales for August. As per estimates, they are likely to have risen 1.4% month-on-month after a 1.8% drop in July, according to analysts tracked by Investing.com. The data are released at 10:00 AM ET (1400 GMT).
3. Oil outlook
The oil stockpile in the U.S. is likely to have eroded by 1.652 million barrels in the week ending September 24 after falling in the week prior as well. Falling inventories are coming as oil prices hover near three-year highs and analysts have raised their price targets for both Crude Oil WTI Futuresand Brent Oil Futures. The data are released at 10:30 AM ET.
Debt Limit, Pending Home Sales, Inventories: 3 Things to Watch
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