Dow down, gold down, Nasdaq just up – the message from Wall Street on Tuesday was a sort of back to the future with those renewed Covid Delta blues driving sentiment.
We saw the blues emerge on Friday and last week as Nasdaq outperformed as investors took fright at the weaker than expected jobs data for August and the rise in Covid Delta cases in the US and across much of Asia.
The surprisingly solid export and import data for August for China had no impact – China is off the radar for most investors these days as the hardline Chinese Communist Party crackdown on business expands.
The Dow dropped 269.09 points to 35,100.00, dragged down by a 1.8% loss in Boeing shares on weak sales data. The S&P 500 fell 0.3% to 4,520.03 but the Nasdaq rose less than 0.1% to 15,374.33, notching a record close. Wall Street was shut on Monday for Labor Day.
Gold sold off heavily, losing 1.9% or more than $US33 an ounce to fall back under the $US1,800 level and settle at $US1,798.50. That was after touching a session low of $US1,793.70.
“Gold prices tumbled as Treasury yields soared higher on expectations a delayed recovery would allow the Fed to tolerate higher inflation in the short-term,” said OANDA senior market analyst Edward Moya wrote in a commentary on Tuesday.
“Wall Street is ever so slightly more concerned with inflation and with Fed tapering likely happening in December, the curve will steepen and that should prove short-term negative for gold.”
Tuesday’s 1.9% slump more than wiped out last week’s 1% gain and sat gold bugs back on their heels. Silver also fell – down close to 2% on the day.
“[The precious metal] could fall towards $1,755, and if that level easily breaks, one last push lower could see prices target the $1700 level,” OANDA’s Moya said.
“Once the market can see past these next few months of pricing pressures, the reality of global disinflation forces will likely put an abrupt end to the move higher in Treasury yields, triggering a resumption of gold buying for many investors.”
Investors again looked at risk and decided that it was back on and that the big techs might be a nice bolt hole. Apple shares hit a new record after revealing it planned a big new iPhone event next week on September 14.
The new iPhone story will concentrate investor attention on the techs for the next week or more. Apple shares touched the new high of $US157.26 in trading and ended at an all-time closing high of $US156.69. As a whole, Apple is now valued at $US2.55 trillion.
Streaming video giant Netflix also hit another high on Tuesday – $US613.85 – and, like Apple, ended at a new all-time closing high of $US606.61. It is now valued at more than $US261 billion. That makes it 16 of the last 17 trading sessions in which Netflix shares have risen.
These new highs and the weakness in gold – have underlined the return of the megatech story for many investors and again saw pressure on value stocks – the Dow’s slide was the largest one day drop for nearly a month.
US bonds though tell a different story – the yield on the 10-year note jumped to 1.37% on Tuesday, a two-month high.
The US dollar rose, forcing the Aussie currency back under 74 US cents to be around 73.90 US cents in early Asian trading.
The move by the Reserve Bank to extend its quantitative easing another two to three months reassured local investors that the tapering of that bond buying by 20% or $1 billion a month, was only an adjustment and not a major move.
