Market Update: U.S. Stocks Mixed as Italy Roils Global Markets

U.S. stocks finished mixed on Tuesday, though the Dow returned to record levels after Canada and the United States crossed the finish line on a new trade deal. Italy was the source of contention internationally after the country’s deputy prime minister expressed a desire to leave the euro bloc.

Stock Rally Fades

The S&P 500 and Nasdaq Composite Index put up mediocre performances on Tuesday. The large-cap S&P 500 Index pared gains to finish flat at 2,923.43, with consumer discretionary shares the biggest drag on growth. The tech-driven Nasdaq fell 0.5% to close at 7,999.55..

The Dow Jones Industrial Average bucked the downtrend, rising 122.73 points, or 0.5% to a new all-time high of 26,773.94. Intel Corp (INTC), Caterpillar Inc. (CAT) and 3M Co (MMM) were the best performers in the Dow 30.

Italy’s Political Crosshairs

Italy’s populist government has roiled international markets after announcing plans to run a much larger than expected deficit through fiscal 2019. Rome’s forthcoming budget will run at a deficit of 2.4% of gross domestic product (GDP), which is three times higher than the EU-mandated maximum.

An outcry from European institutions prompted the Italian government to issue a stern response, with Deputy Prime Minister Luigi Di Maio accusing the EU of “playing terrorism with the markets.” Claudio Borghi, the economic czar of the ruling Lega party, told local news that Italy would be better off with its own currency.

Concerns over Italy’s fiscal future triggered a sharp selloff in regional bond markets, with equities quick to follow. This in turn led to a sharp spike in the value of gold and other safe havens. Comex gold futures surged past $1,210.00 a troy ounce in New York.

Crypto Markets Remain Level

Cryptoassets held within a narrow range on Tuesday, as investors continued to evaluate the latest news to come out of Ripple’s annual Swell conference.

The company behind XRP announced Monday that its new xRapid product has gone live with three financial institutions testing the platform for the first time. Mercury FX, Cuallix and Catalyst Corporate Federal Credit Union are the payment providers that will pilot the new technology. The XRP currency is utilized by xRapid to send international payments in “a matter of minutes.”

The value of XRP hovered just above $0.550 on Tuesday, were it was little changed. Ethereum, bitcoin and bitcoin cash also fluctuated within a narrow range. The total value of all cryptocurrencies held just above $220 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