Benchmarks closed in the red for a second consecutive session on Tuesday, as investors remained cautious on geopolitical uncertainties. Investors remained focused on geopolitical issues emanating from the upcoming public testimony of former Federal Bureau of Investigation Director James Comey and the U.K. election, all scheduled to be held on Thursday. Meanwhile, investors kept a close watch on rift in diplomatic ties between Qatar and other Persian Gulf countries and European Central Bank’s meeting.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) declined 0.2% to close at 21,136.23. The S&P 500 fell 0.3% to close at 2,429.33. The tech-laden Nasdaq Composite Index declined 0.3% to close at 6,275.06. A total of around 6.4 billion shares were traded on Tuesday, lower than the last 20-session average of 6.6 billion shares. The fear-gauge CBOE Volatility Index (VIX) traded near 10.5. Decliners outnumbered advancing stocks on the NYSE by a 1.19 to 1 ratio.
The broader markets remained in a cautious mood as investors kept a close watch on the upcoming testimony from former FBI director James Comey regarding Trump campaign’s possible ties with Russia. Comey is scheduled to appear before the public for the first time at the Senate Intelligence Committee on Thursday after Trump dismissed him on May 9. The panel is probing former national security adviser Michael Flynn’s possible involvement with Russian sources and Comey is expected to face questions regarding Trump’s possible interference in that probe.
Meanwhile, ABC News reported that Comey will stop short of saying Trump thwarted justice in the bureau’s probe of former national security advisor Michael Flynn’s Russian connections.
Investors also remained focused on the U.K. election to see whether Euro-skeptic Prime Minister Theresa May’s Conservative Party will be able to keep its majority in parliament intact. As per a survation poll published last weekend, May’s ruling right-wing Conservative Party was ahead by a single percentage point. Moreover, according to an opinion poll revealed on Tuesday, May is expected to increase her majority in the parliament.
Brexit is expected to affect the financial services industry. This market has a huge presence in London which is not only is the world’s number one location for trading foreign currencies, but about 12% of the U.K.’s total GDP comes from the financials industry.
The auto manufacturing industry could also be hit hard, especially if the U.K. winds up trading under WTO rules. Automakers will face new taxes on cars shipped over to Europe, in addition to increased costs on imported car parts. CNNMoney notes that vehicles assembled in Britain receive almost 60% of their parts from outside of the country, mostly from the EU, and 56% of those cars are sold back into the EU. (Read More)
Meanwhile, Saudi Arabia, the United Arab Emirates and Bahrain ended diplomatic ties with Qatar on Monday on ground that Qatar has interfered in their internal affairs and supported terrorism. However, Qatar said that moves taken by the Persian Gulf countries to cut diplomatic ties were unjustified and based on groundless allegations. This rift between Qatar and the Persian Gulf countries is expected to raise the volatility in global oil markets.
Additionally, investors remained attentive to the European Central Bank’s meeting, scheduled to be held on Thursday wherethe European Central Bank is expected to provide clues on how long ultraloose monetary policy would remain in place.
Stocks that made Headlines
NCI Building Systems, Inc. (NCS – Free Report) posted adjusted earnings of 16 cents per share for second-quarter fiscal 2017 (ended Apr 30, 2017), fourfold the earnings of 4 cents in the prior-year quarter. (Read More)
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we’re mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold. By last year, it was already generating $8 billion in global revenues. By 2020, it’s predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce “”the world’s first trillionaires,”” but that should still leave plenty of money for those who make the right trades early. See Zacks’ Top 3 Stocks to Ride This Space >>