Stocks dive as Wall Street pauses for July 4 holiday

Stocks on Wall Street fell in the final hour of trading in a holiday-shortened session ahead of Independence Day on July 4.

The Dow Jones Industrial Average and the S&P 500 had traded higher for most of the day but, for the second consecutive session, changed directions shortly ahead of the closing bell.

Technology stocks, which have powered the market this year, took a breather after leading the market’s modest rise on modest rise on Monday. 

The Dow fell 132.36 points, or 0.5%, to 24,174.82, after earlier rising as much as 138 points. The S&P 500 dropped 0.5%, to 2713.22, while the technology-heavy Nasdaq Composite declined 0.9%, to 7502.67.

Trading volumes fell to their lowest level since the abbreviated session on November 24, 2017.

Five of 11 sectors in the broad S&P 500 declined, with shares of tech companies falling the most at 1.4%. Financial stocks also fell with government bond yields.

The yield on the benchmark 10-year Treasury note eased to 2.833% from 2.867% on Monday.

Oil prices swing
Energy shares climbed 0.7%, even as oil prices reversed gains after hitting $US75 a barrel. Saudi Arabia said it was prepared to pump more oil to ease supply constraints in the market.

After falling more than 1% at one stage US crude futures settled 0.1% down at $US73.89 a barrel in New York. Brent, the global benchmark, also fell 0.1% to $US77.26.

In trade-related news, data from China’s customs agency showed growth in exports to the US slowing.

As the market continues to assess the trade landscape, many investors are hoping another solid round of earnings growth for the second quarter will help stabilise stocks.

Earnings are expected to increase 20% year over year for companies in the S&P 500.

“That’s very much driven by the tax changes, but I think that the market seems to be trading up and down and sideways [until companies report stronger earnings],” Hennessy Funds portfolio manager Ryan Kelley says.

He compares the market’s current predicament to a “rugby scrum,” noting that factors such as good corporate results and economic data are posed against the Federal Reserve’s hawkish stance and news from Washington.

“As long as I guess the administration continues to believe that there’s a real issue out there and that tariffs are the way to fix world trade, we have some time to sort of work through all of this,” he says.

Global markets recover
Elsewhere, the Stoxx Europe 600 rose 0.8% after German Chancellor Angela Merkel resolved an immigration issue that had threatened to fracture her ruling coalition.

Germany’s DAX jumped 0.9%, France’s CAC 40 added 0.8% and the UK’s FTSE 100 gained 0.6%.

In Asia, Hong Kong’s Hang Seng dropped 1.4% as trading resumed after a holiday.

The Shanghai Composite Index rallied 0.4% after plunging 2.5% on Monday to its lowest close since early 2016.

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