Stocks declined on Tuesday, with the S&P 500 snapping a 7-day winning streak and the Dow falling more than 200 points, as investors began to worry that the U.S. economic recovery was stagnating. However, the tech-heavy Nasdaq posted a new record close.
Investors are looking ahead to Federal Open Market Committee's June meeting minutes slated for Wednesday afternoon for insight into the Federal Reserve's plans to begin curbing its massive quantitative easing program and discussions on coming interest rate hikes.
Here's how the market settled to start the shortened week:
S&P 500 Index (NYSE: SPY): -0.20% or -8.80 points to 4,343.54
Dow Jones Industrial Average (NYSE: DIA): -0.60% or -208.98 points to 34,577.37
Nasdaq Composite Index (NASDAQ: QQQ): +0.17% or +24.32 points to 14,663.64
Pentagon ends Microsoft's JEDI cloud contract:
The Pentagon canceled a $10 billion cloud-computing contract awarded to Microsoft (NASDAQ: MSFT) in 2019--known as the Joint Enterprise Defense Infrastructure or JEDI--on Tuesday, indicating that the Department of Defense plans to divide the work between the tech giant and Amazon (NASDAQ: AMZN) instead.
"the Department has determined that, due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs," the DoD said in a press statement.
The Pentagon announced plans for a "multi-vender project" and said it "intends to seek proposals from a limited number of sources, namely Microsoft and Amazon Web Services," according to Bloomberg. It said other vendors will be considered if they can show they meet the contract terms.
ISM service sector PMI expands at slower pace in June:
Service sector activity continued to expand in June, but at a slower pace compared to May, as the industry continues to face supply chain and labor changes on its road to pandemic recovery.
The Institute for Supply Management's Service Purchasing Managers' Index for June registered at 60.1, declining from May's all-time high of 64.0. Readings above the neutral level of 50 indicate sector expansion.
"The rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month's all-time high," Anthony Nieves, chair of the ISM, said in Tuesday's press statement. "Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions."
Didi shares drop on Chinese regulatory pressures:
Shares of DiDi Global (NYSE: DIDI) fell by more than 19% on Tuesday after the Cyberspace Administration of China opened an investigation into the ride-hailing company's data practices. The Chinese regulator announced late last week that new users in China will not be able to download DiDi's app as the company is under a cybersecurity review.
The investigation comes just days after DiDi's blockbuster $4.4 billion initial public offering (IPO) debut on the New York Stock Exchange, which was the largest IPO for a Chinese issuer on U.S. markets since Alibaba's (NYSE: BABA) listing back in 2014.
Here's how markets were trading after opening bell:
S&P 500 Index: +0.00% or +0.01 points to 4,352.35
Dow Jones Industrial Average: -0.19% or -67.46 points to 34,718.90
Nasdaq Composite Index: +0.26% or +37.78 points to 14,676.09
OPEC+ fails to reach agreement for August supply, sending crude prices higher:
A meeting between the Organization of Petroleum Exporting Countries and its allies, referred to are OPEC+, was unexpectedly ended without reached a deal, leaving oil markets to face tight supplies and rising prices.
OPEC+ had voted on a proposal to increase oil production by roughly 2 million barrels per day between August and the year's end in 400,000 barrels per day monthly installments at its latest meeting on Friday, according to multiple reports. Members also proposed extending the group's output cuts through the end of 2022. However, the United Arab Emirates rejected these plans and continues to block an agreement on Tuesday.
On Tuesday, oil prices jumped to their highest level in six years, with West Texas Intermediate (NYSE: USO) futures trading as high as $76.98. Oil prices have rallied more than 45% in the first half of the year, supported by broad vaccine campaigns, easing lockdown restrictions and OPEC+ production cuts.