Investors awoke to continued Italian drama on Tuesday, but were able to shrug it off for the most part, leaving the S&P 500 little changed. The Dow Jones Industrial Average outperformed, climbing 0.5% to a new all-time high, while the tech-heavy Nasdaq Composite lagged for the second day in a row, shedding 0.5%.
Like the Nasdaq, the Russell 2000 also struggled on Tuesday, losing 1.0% to extend its weekly loss to 2.4%. The small-cap index has been weighed down this week by a last-minute trade deal between the U.S. and Canada, which has brightened the outlook for global trade -- and, in turn, weakened demand for smaller, domestically-focused companies.
Overnight, Italy's anti-establishment government defended its plan to increase the country's budget-deficit target for next year to 2.4% of GDP, causing concern for global investors. In addition, Claudio Borghi, who leads the economic policy of the ruling Lega party, claimed that most of Italy's problems could be solved if the country had its own currency, though, that idea was dismissed by Italy Deputy Prime Minister Di Maio. The yield on Italy's 10-yr bond spiked 18 basis points to 3.48% -- its highest level since February 2014.
Back of the home front, the Dow was boosted by top-weighted Boeing (BA 386.37, +4.08, +1.1%), chipmaker Intel (INTC 48.10, +1.65, +3.6%), and Caterpillar (CAT 154.82, +2.54, +1.7%). Intel propelled the Philadelphia Semiconductor Index as high as +0.7% intraday, but the index eventually lost steam, finishing at its flat line.
FANG stocks underperformed in today's session, with Facebook (FB 159.33, -3.11, -1.9%), Amazon (AMZN 1971.31, -33.05, -1.7%), and Netflix (NFLX 377.14, -4.29, -1.1%) each falling. Facebook continues to disappoint investors, now down 5.6% since Friday, when it disclosed that it discovered a "very serious" security issue that could affect around 50 million accounts.
Also of note, Amazon announced that it will be raising its minimum wage to $15 an hour for all U.S. employees, effective November 1.
In earnings news, PepsiCo (PEP 108.72, -1.99, -1.8%) and online retailer Stitch Fix (SFIX 28.94, -15.69, -35.2%) fell after reporting their quarterly results. Despite beating earnings-per-share estimates, PepsiCo shares slipped after the company lowered guidance for fiscal year 2018. Stitch Fix plunged after also issuing disappointing guidance, despite upbeat quarterly earnings.
Investors did not receive any notable economic data Tuesday, but did consider auto and truck sales throughout the day. General Motors (GM 33.30, -0.90, -2.6%) and Ford Motor (F 9.20, -0.12, -1.3%) fell, as General Motors reported Q3 sales to be down 11.1% year-over-year to 694,638 vehicles, while Ford reported September U.S. sales to be down 11.2% year-over-year to 197,404 units.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index, September's ADP Employment Change, and September's ISM Services report on Wednesday.
- Nasdaq Composite +15.9% YTD
- Russell 2000 +7.9% YTD
- S&P 500 +9.3% YTD
- Dow Jones Industrial Average 8.3%+ YTD