Stocks Take a Breather: Regional Banks Rally, While Crypto Companies Face A Wave Of Uncertainty

The U.S. stock market experienced a mixed session as of midday Tuesday, with major averages trading flat, while small caps in the Russell 2000 staged a strong rally fueled by the resurgence of regional banks.

The SPDR S&P Regional Banking ETF KRE was up 5.2% in the session, with BankUnited Inc. BKU is leading gains, up by 9.7%, followed by Independent Bank Corp. INDB (8%), PacWest Bancorp PACW (7.4%), Zions Bancorporation ZION (6.9%), Comerica Inc. CMA (6.4%), and Western Alliance Bancorporation WAL (5.6%).

Coinbase Global Inc. COIN plummeted 14%, as the company is being sued by the SEC for allegedly operating an unregistered securities exchange. This comes just a day after the SEC filed a similar charge against Binance.

Apple Inc. AAPL has continued to fall following the launch of Vision Pro, the company's first augmented/virtual reality headset priced at $3,499, as the new product generated some disappointment among Wall Street investors.

Cues From Tuesday's Trading:

The S&P 500 index was flat for the day, the Dow Jones Industrial Average traded 0.1% lower, while the tech-heavy Nasdaq 100 index fell 0.16%. Small caps in the Russell 2000 index soared 2.5% during the session. 

U.S. Indices' Performance On Tuesday

Index	Performance (+/-)		Value
Nasdaq 100	-0.16%		14,540.28
S&P 500 Index	+0.06%		4,274.19
Dow Industrials	-0.15%		33,511.16

Analyst Color:

The next important milestone remains the Fed, where there is certainly a risk that a rate hike could cause a meaningful pullback, said fund manager Louis Navellier.

A pause, which is currently a 70% bet, could trigger a further relief rally, he said. “With the non-FANG P/E still at 15X, there remains room for the rest of the market to move up,” he added.

Comerica’s John Lynch has more muted expectations. The analyst anticipates the Fed will remain steadfast in policy pursuits, as elevated interest rates and tighter credit standards weigh on economic activity for the remainder of the year.

"Falling corporate profits historically have led to reductions in employment and capital expenditures, and we see no reason why this experience should prove any different," he said.

“Therefore, it is conceivable that we will need to retest the October equity market lows before investors reprice a recovery in GDP and corporate profits next year.”

Tuesday's Trading In Major US Equity ETFs: In midday trading on Tuesday, the SPDR S&P 500 ETF Trust SPY was flat at $427.12, the SPDR Dow Jones Industrial Average ETF DIA fell 0.2% to $335.40 and the Invesco QQQ Trust QQQ was 0.3% lower to $353.53, according to Benzinga Pro data.

The Health Care Select Sector SPDR Fund XLV, the Consumer Discretionary Select Sector SPDR Fund XLY and the Technology Select Sector SPDR Fund XLK were the underperformers, down 1%, 0.9% and 0.5% respectively.

The Financial Select Sector SPDR Fund XLF outperformed, up 1.1%, followed by the Real Estate Select Sector SPDR Fund XLRE, up 0.8%. 

Latest Economic Data:

The IBD/TIPP Economic Optimism Index in the U.S. made a modest uptick, reaching 41.7 in June 2023 compared to 41.6 in May, but well below the expected 45.2. 

Stocks In Focus:

• Thor Industries, Inc. THOR rose nearly 17% after reporting better-than-expected results last quarter. 
• Unity Software, Inc. U fell over 7%, halving Monday's 17%+ rally on Apple, Inc. AAPL Vision Pro partnership.
• J.M. Smucker Co. SJM, and Casey’s General Stores, Inc. CASY are among the notable companies reporting earnings on Tuesday.

Commodities, Bonds, Other Global Equity Markets:

Crude oil held steady, with a barrel of WTI-grade crude trading at $71.95. The United States Oil Fund ETF USO ticked 0.1% higher to $64 per share.  

Treasury yields slightly rose, with the 10-year yield up by 2 basis points to 3.70% and the two-year yield up 5 basis points to 4.52%. The iShares 20+ Year Treasury Bond ETF TLT was 0.3% higher for the day. 

The dollar strengthened, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.2% lower to 1.0685.

European equity indices were slightly higher. The SPDR DJ Euro STOXX 50 Etf  FEZ was flat. 

Gold edged up 0.1% to $1,964/oz. The SPDR Gold Trust GLD was 0.1% higher to $182. Silver ticked 0.3% up to $23.59, with the iShares Silver Trust SLV up 0.1% to $21.67 per share. Bitcoin BTC/USD rose 2.8% to $26,435.

Staff writer Piero Cingari updated this report midday Tuesday. 

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