Market Update: Stocks Recover Modestly Following Monday Selloff as Energy Shares Gain Ground

U.S. stocks recovered slightly Tuesday from one of their biggest declines of the quarter as shares tied to energy and information technology regained their poise.

Stocks Edge Higher

All of Wall Street’s major indexes headed for gainsTuesday but ended the day well off their session highs. The large-cap S&P 500 Index rose 0.2% to 2,723.06, with six of 11 primary sectors recording gains. Energy was the largest single contributor, rallying 1.3% as a sector.

Dow industrials rose more than 130 points before giving back most of those gains by the close. The blue-chip index finished up 30.31 points, or 0.1%, at 24,283.11.

Meanwhile, the technology-heavy Nasdaq Composite Index added 0.4% to finish at 7,561.63.

Implied volatility in U.S. stocks over the next 30 days weakened on Tuesday as calm returned to Wall Street. The CBOE VIX Volatility Index fell more than 7% to close at 15.99 on a scale of 1-100 where 20 represents the historic average. The so-called “fear index” Monday closed at three-and-half-month highs.

Stocks were pummeled Monday after The Wall Street Journal published a report stating that the Trump administration is planning to block Chinese investment in U.S. technologies. The report was later dismissed by Treasury Secretary Steve Mnuchin, who said the Trump administration was combating intellectual property theft against all perpetrators and not just China.

The Monday selloff pushed the Dow below its 200-day moving average for the first time since June 2016.

Oil Gains Ground

Crude prices traded firmly to the upside on Tuesday as investors began to doubt OPEC’s ability to ramp up crude production quickly enough to prevent the emergence of a new supply-demand imbalance in global markets.

U.S. West Texas Intermediate (WTI) futures clawed back above $70 a barrel for the first time since May. The August futures contract added $2.35, or 3.5%, to $70.43 a barrel on the New York Mercantile Exchange. ICE Brent futures gained $1.65, or 2.2%, to $76.38 a barrel.

Last week, the Saudi-led Organization of the Petroleum Exporting Countries (OPEC) agreed to ramp up crude production by 600,000 barrels per day. According to MarketWatch, OPEC and its allies are planning to raise production levels by a combined 1 million barrels per day in the second half of the year.

Cryptocurrencies Continue Lower

The cryptocurrency market was back on the defensive Tuesday following two days of relative calm. The bulk of the declines occurred around midday.

Bitcoin prices reached a session low of $6,123.79 before recovering slightly. The largest cryptocurrency by market capitalization has been hovering between $6,200 and $6,300 since Sunday afternoon.

Bitcoin cash was the biggest decliner among the majors, falling more than 5% to $717.

Among the top-20 crypto assets in circulation, 19 had reported declines Tuesday afternoon. As a result, the cryptocurrency market shed $8 billion on the day to over $248 billion, according to CoinMarketCap.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi