U.S. markets and stock ETFs regained their footing toward the end of Tuesday after oil prices retreated from a record jump in the prior session and as investors waited on a widely anticipated interest rate cut out of the Federal Reserve Wednesday.
On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) increased 0.5%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 0.1% and SPDR S&P 500 ETF (NYSEArca: SPY) was 0.3% higher.
The pullback in crude oil prices weighed on sentiment early Tuesday after Saudi Arabia announced output could return more quickly than initially anticipated, the Wall Street Journal reports.
“People were thinking it would be months until we got that production back on line, and now it seems more like weeks. Putting that production back on line alleviates the risk of a higher disruption,” Keith Buchanan, a portfolio manager at GLOBALT Investments, told Reuters.
“What we are going to watch going forward is to see how these higher oil prices affect the consumer, especially here in the United States, as the U.S. consumer is driving the growth in the economy right now,” Carter Henderson, portfolio specialist at Fort Pitt Capital Group, told the WSJ.
Along with the hot button topic on crude oil supplies going forward, investors were also waiting on the Fed’s policy meeting this week where many expect another quarter percentage point interest rate cut Wednesday. However, some wavered on how recent developments in Saudi Arabia and trade talks with China could influence further monetary policy decisions.
Updated data on Tuesday revealed U.S. industrial production recovered in August, a sign that is likely to ease concerns over U.S. manufacturing as many worry about an economic downturn.
“The expansion’s been a story of slow and steady growth,” Craig Birk, chief investment officer at Personal Capital, told the WSJ. “There’s nothing to us that suggests that has to end anytime soon. The consumer’s still doing fine, unemployment’s still very low, manufacturing is a bit soft but not terrible. There’s no reason the slow and steady expansion can’t continue, especially, it appears, with continued support from the Fed.”
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