After coming under pressure early in the session, stocks remain mostly lower in afternoon trading on Tuesday. With the drop on the day, the major averages are giving back ground after moving higher over the two previous sessions.
Currently, the major averages are off their lows of the session but still in negative territory. The tech-heavy Nasdaq is underperforming its counterparts, tumbling 230.21 points or 1.6 percent to 14,302.34.
The S&P 500 is also down 24.14 points or 0.5 percent at 4,558.50, while the Dow is posting a more modest loss, edging down 22.45 points or 0.1 percent to 34,899.43.
The weakness that emerged on Wall Street reflected renewed concerns about the outlook for monetary policy following comments from Federal Reserve Governor Lael Brainard.
Brainard described inflation as much too high during remarks at a Minneapolis Fed conference and predicted the Fed would start reducing its balance sheet at a “rapid pace” as soon as the May meeting.
“Given that the recovery has been considerably stronger and faster than in the previous cycle, I expect the balance sheet to shrink considerably more rapidly than in the previous recovery,” Brainard said in prepared remarks.
She added, “The reduction in the balance sheet will contribute to monetary policy tightening over and above the expected increases in the policy rate reflected in market pricing and the Committee’s Summary of Economic Projections.”
The Fed may provide additional clues about the outlook for monetary policy with the release of the minutes of its March meeting on Wednesday.
CME Group’s FedWatch tool is currently indicating a 76.6 percent chance the Fed will raise rates by 50 basis points next month.
In U.S. economic news, the Institute for Supply Management released a report showing U.S. service sector growth reaccelerated in the month of March.
The ISM said its services PMI rose to 58.3 in March from 56.5 in February, with a reading above 50 indicating growth in the sector. Economists had expected the index to rebound to 58.0.
The slightly bigger than expected increase by the services PMI follows three consecutive monthly decreases after the index reached a record high in November.
A separate report released by the Commerce Department showed the U.S. trade deficit was nearly unchanged in February, as imports and exports both increased.
Sector News
Semiconductor stocks have pulled back sharply after turning in a strong performance in the previous session, resulting in a 3.8 percent nosedive by the Philadelphia Semiconductor Index.
Significant weakness is also visible among computer hardware stocks, as reflected by the 2.5 percent slump by the NYSE Arca Computer Hardware Index.
Airline stocks have also shown a significant move to the downside on the day, dragging the NYSE Arca Airline Index down by 2.2 percent.
Networking housing and gold stocks are also seeing notable weakness, while pharmaceutical and utilities stocks are bucking the downtrend.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, with several markets closed for holidays. Japan’s Nikkei 225 Index edged up by 0.2 percent, while South Korea’s Kospi inched up by 0.1 percent.
Meanwhile, the major European markets turned in a mixed performance the day. While the U.K.’s FTSE 100 Index advanced by 0.7 percent, the German DAX Index fell by 0.7 percent and the French CAC 40 Index slumped by 1.3 percent.
In the bond market, treasuries have shown a significant move to the downside over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 14.1 basis points at 2.553 percent.
Business News
U.S. Stocks Remain Mostly Lower In Afternoon Trading
2022-04-05 17:30:05
