Major U.S. stock indexes closed lower on Tuesday as enthusiasm centered on a solid round of earnings from major retailers, including components Dow Home Depot Inc. and Walmart Inc., appeared to fade amid fears of ‘inflation.
How are stock market indices performing?
The Dow Jones Industrial Average DJIA,
fell 267.13 points, or 0.8%, to close at 34,060.66
The S&P 500 SPX,
ends with a loss of 35.46 points, or 0.9%, to 4,127.83.
The Nasdaq Composite COMP,
slipped 75.41 points, or 0.6%, to end at 13,303.64
On Monday, stocks suffered modest losses, with the Dow Jones falling 54.34 points, or 0.2%, to close at 34,327.79, while the S&P 500 fell 0.3% and the Nasdaq Composite fell 0.4%.
What is driving this market?
Shares fell on Tuesday as stock investors caught in a standoff, as bullish business results and expectations of a booming economic expansion in the wake of the COVID-19 pandemic competed with concerns about high valuations and signs of accelerating inflationary pressures.
Sixty-nine percent of investors expect “above-trend” growth and inflation, a record percentage, according to the survey conducted this month by fund managers at Bank of America Corp. The bank said Tuesday. Only 9% cited COVID-19 as the biggest tail risk.
Lily: Fund managers position themselves for ‘boom expectations’ with tech demand at three-year low, Bank of America survey finds
Halo Investing, a fintech platform for protective investing, has seen an increase in business due to inflation concerns, according to its co-founder and chairman, Jason Barsema. Financial advisers still want exposure to tech stocks, but they are looking for 30% first-down protection for companies like Apple Inc.
and Tesla Inc.
he told MarketWatch in a phone interview on Tuesday.
Meanwhile, Home Depot
The results quickly boosted the mood on Wall Street after the home improvement retailer reported first quarter profits and sales well above expectations, citing “unprecedented demand” for home projects. . Other heavy duty retailers including Walmart Inc.
and Macy’s Inc.
also delivered strong results on Tuesday morning.
But a slew of weaker-than-expected housing data has undermined the positive tone.
The Census Bureau said U.S. home builders began building homes at a seasonally adjusted annual rate of 1.57 million in April, down 9.5% from the lowered figure the month before. The pace of issuance of permits for new housing picked up again in April. Licensing of new homes took place at a seasonally adjusted annual rate of 1.76 million, up 0.3% from March and 61% from a year ago.
Strong retail earnings have reminded investors that the consumer is “making a comeback” as concerns about the pandemic fade, Craig Fehr, investment strategist at Edward Jones, told MarketWatch. But housing data, which has likely been hampered by rising lumber prices and other factors, reminded that “inflation is still the predominant risk to this positive economic story.”
Retailers are highlighting what has been a strong earnings season. But equity markets have seen choppy price action since the middle of last month, and investors should likely brace themselves for more volatility and consolidation, Fehr said.
“After the first year of this recovery where stocks have risen sharply and rather steadily, seeing the market tread a bit on the water is not a bad thing,” he said, because it gives the market ” the opportunity to curb valuations a bit. . ”
Former Treasury Secretary Larry Summers continued his criticism of the Federal Reserve’s easy political stance on Tuesday, saying, in remarks at an event hosted by the Atlanta Fed, that the central bank’s emphasis on the healing of the job market is moved amid evidence of labor shortages.
In business news, Amazon.com Inc. AMZN,
has reportedly been in talks to buy MGM Holdings Inc., the studio behind the James Bond franchise, according to a report on Monday by The Information, citing a person familiar with the situation. The report comes after AT&T Inc. T and Discovery Inc. DISCA on Monday struck a $ 43 billion deal to consolidate its media holdings into a new company.
Which companies are targeted?
Walmart shares closed up 2.2% after generating profit and revenue that exceeded expectations and raised its guidance for the full year.
Macy’s Inc. shares fell 0.4% after recording a surprise earnings beat and improving forecasts.
Actions of Coinbase Global Inc.
PIECE OF MONEY,
fell 3.7% to $ 239, a day after the crypto platform announced plans to sell $ 1.25 billion in convertible debt and closed below its benchmark price of 250 $ for the first time since the company was listed on the Nasdaq stock exchange in mid-April
- Flywire Corp. FLYW, has set the terms of its initial public offering, in which the Boston-based payment activation and software company seeks to raise up to $ 208.8 million.
- BioNTech SE BNTX, the German biotech which has partnered with Pfizer Inc. PFE, to develop a COVID-19 vaccine approved for use in the United States, announced on Tuesday that it had appointed Jens Holstein as chief financial officer.
What are other markets doing?
The yield of the 10-year Treasury bill TMUBMUSD10Y,
fell 1.4 basis points to 1.639%. Bond yields and prices move in opposite directions.
The ICE US Dollar DXY index,
a measure of the US dollar against a basket of six big rivals, fell 0.4% to trade at its lowest level since late February.
West Texas Intermediate CL00 crude for June delivery fell 78 cents, or 1.2%, to $ 65.49 per barrel on the New York Mercantile.
The June GC00 gold futures contracts edged up 40 cents, or less than 0.1%, to $ 1,868 an ounce, the most active contract since Jan. 7, according to FactSet data.
The Stoxx Europe 600 SXXP index,
rose 0.2%, while London’s FTSE 100 UKX,
Hong Kong Hang Seng Index HSI,
rose 1.4%, while Japan’s Nikkei 225 NIK,
jumped 2.1% and the Shanghai Composite COMP,
edged up 0.3%.
—Mark DeCambre contributed to this article