U.S. Stocks Move Back To The Downside After Early Rebound

After showing a strong move to the upside early in the session, stocks have shown a notable downturn over the course of the trading day on Tuesday. The major averages have pulled back well off their highs of the session and into negative territory.

The tech-heavy Nasdaq has been bouncing back and forth across the unchanged line in recent trading and is currently down 2.73 points or less than a tenth of a percent at 11,620.52. The Dow is down 266.67 points or 0.8 percent at 31,979.03 and the S&P 500 is down 20.95 points or 0.5 percent at 3,970.29.

With the pullback on the day, the Dow and the S&P 500 have once again fallen to their lowest intraday levels in over a year.

The early rebound on Wall Street partly reflected bargain hunting, as some traders looked to pick up stocks at reduced levels following the recent sell-off.

The steep drop seen on Monday dragged the Nasdaq down to its lowest closing level since November 2020, while the Dow and the S&P 500 also hit one-year closing lows.

Buying interest waned over the course of the morning, however, as traders remain wary about inflation, higher interest rates and the outlook for the global economy.

Traders may also have been reluctant to get back into the markets ahead of the release of key inflation data in the coming days.

The Labor Department is due to release its report on consumer price inflation on Wednesday, with the annual rate of price growth expected to slow to 8.1 percent in April from 8.5 percent in March.

The latest snapshot of inflation could impact expectations regarding how aggressively the Federal Reserve plans to raise interest rates.

Sector News

Banking stocks have come under pressure over the course of the session, dragging the KBW Bank Index down by 2.6 percent to its lowest intraday level in over a year.

Significant weakness has also emerged among commercial real estate stocks, as reflected by the 2.4 percent slump by the Dow Jones U.S. Real Estate Index. The index has also fallen to a one-year intraday low.

Telecom stocks are also seeing considerable weakness on the day, resulting in a 2.2 percent drop by the NYSE Arca North American Telecom Index.

Steel, housing and utilities stocks have also shown notable moves to the downside as the day has progressed, while strength remains visible among biotechnology stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday, although China’s Shanghai Composite Index bucked the downtrend and jumped by 1.1 percent. Japan’s Nikkei 225 Index slid by 0.6 percent, while Hong Kong’s Hang Seng Index sank by 1.8 percent.

Meanwhile, the major European markets moved back to the upside following recent weakness. While the German DAX Index jumped by 1.2 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index rose by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries are extending the rebound seen over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 12.5 basis points at 2.954 percent.

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