US Market Indexes Close Lower on Tuesday

E-mini S&P 500 Index

E-mini S&P 500 Index

Stocks closed lower Tuesday, breaking an eight-day winning streak for the Dow Jones industrial average. Treasuries were a key factor for the market Tuesday as investors watched 10-year Treasury yields climb to 3.08%.

The yield, a barometer for mortgage rates and other financial instruments, has jumped recently on signs of rising inflation, which sparked market speculation for more rate hikes later this year.

US stocks dropped sharply on Tuesday after Home Depot reported quarterly sales that fell short of Wall Street's expectations and interest rates breached new highs.

"We're of the view that we're not in a high-rate environment, we're in a less-low rate environment", said Erik Davidson, chief investment officer at Wells Fargo Private Bank. The Nasdaq composite tumbled 1% and the S&P 500 0.8%.

The Dow Jones industrial average gained 68 points, or 0.3 percent, to 24,899. The drop pulled the 30-company average to a slight loss for the year. The Russell 2000 index of smaller-company stocks gave up 1 point, or 0.1 percent, to 1,598.

TECH TUMBLES: A slide in technology stocks weighed on the market. Among the worst performers on the S&P 500, Agilent Technologies (A) shares dropped almost 10% after the maker of medical instruments and other equipment posted quarterly earnings that matched forecasts late Monday.

Japan's benchmark Nikkei 225 edged down 0.2 percent to 22,818.02. That's the highest level since July 2011 for the yield, which is used to set interest rates on mortgages and other kinds of loans.

Home Depot Inc (HD.N) shares slipped 1.6 percent after the home improvement retailer missed sales forecasts as the long winter put a damper on demand for spring products. New data Tuesday morning showed strong retail sales and homebuilder confidence. Bond yields tend to rise when investors expect faster economic growth and higher inflation.

The Federal Reserve has signaled it will raise rates twice more this year, after having done so in March, and most economists foresee the next increase in June.

The market now prices a near 40% chance of an additional third hike this year by the Fed and sees the Fed funds rate above 2.75% at the end of 2019.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.