S&P 500 and Nasdaq Hit Records as Trade Deficit Widens
Major indexes closed at all-time highs Monday while the U.S. trade gap blew past forecasts and crude oil rebounded on Middle East tensions.
U.S. equity markets pushed to record territory on Tuesday, with the S&P 500, Nasdaq Composite, and Nasdaq 100 all closing at all-time highs. The Dow Jones Industrial Average also gained ground, though the rally was uneven — small-cap stocks tracked by the Russell 2000 finished lower, signaling that large-cap buyers were doing the heavy lifting while smaller companies sat out the advance.
The day's sharpest economic headline was a wider-than-expected U.S. trade deficit for August, which came in at -$105.6 billion against a forecast of -$102.0 billion. Analysts pointed to the ongoing AI infrastructure buildout as a key driver swelling import volumes, reflecting how domestic capital investment is pulling in goods from overseas at an accelerating pace. Canada, by contrast, reported a surprisingly robust August trade surplus of $4.20 billion, well above the $1.55 billion consensus estimate.
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Energy markets kept traders on edge throughout the session. Crude oil sold off early before reversing course, closing near session highs as rising tensions around the Strait of Hormuz renewed supply-disruption fears. A private inventory survey showing a headline crude draw added further support to prices late in the day.
Treasury yields ended mostly lower, with shorter-duration maturities leading the decline. The 2-year yield fell roughly 3.5 basis points to 4.80%, while the 10-year slipped to 5.28%. Fed officials offered contrasting signals: Kansas City Fed President Schmid described the labor market as being in a good place, while San Francisco Fed President Daly cautioned that further tightening would hinge on whether shocks tied to AI, tariffs, and energy prove persistent. Markets currently price an October rate hike probability at just under 20%, with roughly 70% odds of at least one 25-basis-point increase by year-end.
Bitcoin drew attention in crypto markets as it compressed into a tighter trading range, building what chartists described as pressure for a directional breakout. Continue reading at Forexlive.
