NEW YORK: The benchmark S&P 500 and the Dow slipped on Tuesday as an uptick in Treasury yields pressured some megacaps, and traders scaled back expectations for an early start to interest-rate cuts ahead of key inflation reports due later this week.
Some megacap stocks like Apple and Tesla lost 0.5% and 2.2% respectively, while chip stocks like Intel and Micron Technology lost 0.2% each, keeping gains on the tech-heavy Nasdaq in check.
Also pressuring risky assets, yields on shorter- and longer-dated US Treasury notes inched up over 4%.
A slew of government and corporate bond issuances are due later this week.
“I think this is pre-earnings jitters, with valuations being quite rich, and you needing earnings growth to support these valuations,” said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management.
“I am also quite interested to see how these (Treasury) auctions go off... if we can’t refinance it, that means rates are higher for longer and the Fed is not out of the way.” Among the S&P 500’s 11 sectors, energy stocks were the hardest hit, with a 1.2% loss, while healthcare led gains with a 0.3% advance.
Wall Street had a strong finish to the previous session, during which the tech-heavy Nasdaq jumped over 2% to log its best day since November. The benchmark S&P 500 also drew near its highest closing level hit two years ago.
Data on consumer and producer inflation, expected on Thursday and Friday, respectively, will be crucial for clues on the Federal Reserve’s monetary policy trajectory.
Market participants see a 61% chance the Fed could slash rates by at least 25 basis points in March, according to the CME Group’s FedWatch Tool, down from nearly 85% in the last weeks of 2023, after mixed signals from policymakers on the timing of rate cuts.
Atlanta Fed President Raphael Bostic, on Monday, stressed the need to keep monetary policy tight, while Fed Governor Michelle Bowman retreated from her persistently hawkish view and signaled a willingness to support eventual rate cuts as inflation eases.
Investors will parse Fed Vice Chair for Supervision Michael Barr’s remarks for his perspectives on the policy outlook later on Tuesday.
Quarterly earnings on Friday from JPMorgan Chase, Wells Fargo, Bank of America and Citigroup will also provide insights into the health of corporate America.
At 12:14 p.m. ET, the Dow Jones Industrial Average was down 157.52 points, or 0.42%, at 37,525.49, the S&P 500 was down 4.30 points, or 0.09%, at 4,759.24, and the Nasdaq Composite was up 19.68 points, or 0.13%, at 14,863.45.
Boeing weighed on the Dow, shedding 0.9%, down for the second day as the US National Transportation Safety Board continued its probe into a recent mishap.
Juniper Networks surged 22.2% after a source told Reuters that Hewlett Packard Enterprise was in talks to buy the networking product maker in a $13-billion deal. The server maker dropped 7.3%.
Declining issues outnumbered advancers for a 2.31-to-1 ratio on the NYSE and for a 1.71-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and no new lows, while the Nasdaq recorded 50 new highs and 55 new lows.
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