By Christine Idzelis and William Watts
Powell said some of the supply bottlenecks at the heart of a spike in inflation have worsened. According to Shah, some investors worry that persistently high elevation will destroy demand and put the Fed in a difficult position of tightening monetary policy into a weakening economy. Shah said that she expects inflation will stay elevated well into 2022 and then start to fade.
U.S. Treasury Secretary, Janet Yellen warned that the Treasury Department likely will exhaust extraordinary measures to keep from defaulting on its debt if Congress hasn’t acted to raise or suspend the debt limit by Oct. 18 .
Energy markets have been another source of concern, as Europe and Asia fight for natural-gas supplies. The lead natural-gas contract /zigman2/quotes/210189548/delayed NG00 +0.38% has surged around 130% this year.
With consumers facing higher oil prices as the cost of living rises in the pandemic, Shah said there are signs inflation is weighing on spending and sentiment.
In U.S. economic data, the Conference Board said its index of consumer confidence slid to a seven-month low of 109.3 this month from a revised 115.2 in August.
The U.S. trade deficit in goods rose 0.9% in August to $87.6 billion. And the S&P Case-Shiller 20-city home-price index rose 19.9% in the year to July.
“We’re in that time period right now where we’re focusing more on the macro headlines because we’re still about two weeks away from earnings season,” said Larry Adam, chief investment officer at Raymond James, in a phone interview Tuesday. That creates some volatility, he said.
As companies start reporting results for the third quarter, investors will get a “bottom up” view of what “CEOs and CFOs are really seeing in the marketplace,” said Adam, who is expecting that earnings will be “very solid.”
Which companies were in focus?
Shares of Ford Motor Co. /zigman2/quotes/208911460/composite F -2.47% rose 1.1% after the auto maker announced plans to spend $11.4 billion to build “mega-campuses” in Tennessee and Kentucky, to help supply new manufacturing capacity for electric vehicles.
Thor Industries Inc. /zigman2/quotes/202832948/composite THO +0.89% topped Wall Street expectations for its fiscal fourth-quarter profit, showing a year-over-year sales gain as demand for recreational vehicles remained strong. Shares jumped 7.9%.
Shares of Aurora Cannabis Inc. /zigman2/quotes/210559470/composite ACB +0.15% shook off premarket losses, rising around 7% after the Canadian company late Monday said sales continued to decline while losses mounted in the final three months of its fiscal year.
The Wall Street Journal reported that Merck & Co. Inc. /zigman2/quotes/209956077/composite MRK -3.79% was in talks to acquire Acceleron Pharma Inc. /zigman2/quotes/203395072/composite XLRN -0.52% , which has a market value of around $11 billion. The report said a deal could be announced this week if the talks don’t fall apart. Acceleron shares climbed 2.2%, while Merck shares dipped about 0.1%.
How did other assets trade?
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.73% , a measure of the currency against a basket of six major rivals, was up 0.3%.
Oil futures pulled back from an earlier jump, with the U.S. benchmark /zigman2/quotes/209723049/delayed CL00 +0.03% settling 0.2% lower at $75.29 a barrel. Gold futures /zigman2/quotes/210034565/delayed GC00 +0.38% fell 0.8% to settle at $1,737.50 an ounce.
In Asia, the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.56% rose 0.5%, while the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -2.67% rose 1.2% in Hong Kong. Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK -2.53% fell 0.2%.
—Steve Goldstein contributed to this report