U.S. Stocks Extending Pullback Following Recent Surge By Treasury Yields

Stocks have moved mostly lower during trading on Tuesday, extending the pullback seen during the previous session. The Dow and the S&P 500 continue to give back ground after reaching record closing highs last Friday.

Currently, the Dow is down 211.18 points or 0.5 percent at 42,720.42 and the S&P 500 is down 22.16 points or 0.4 percent at 5,831.82. The tech-heavy Nasdaq is posting a more modest loss, down 7.79 points or less than a tenth of a percent at 18,532.22.

Renewed concerns about the outlook for interest rates are weighing on Wall Street following a recent surge by U.S. treasury yields.

The yield on the benchmark ten-year note has jumped to its highest levels in almost three months amid worries about the U.S. fiscal deficit and comments from Federal Reserve officials hinting at gradual rate cuts.

After the Fed slashed interest rates by 50 basis points last month, CME Group’s FedWatch Tool is currently indicating a 91.0 percent chance of just a 25 basis point rate cut next month.

A steep drop by shares of Verizon (VZ) is also weighing on the Dow, with the telecom giant tumbling by 4.0 percent on the day.

The slump by Verizon comes after the company reported third quarter earnings that beat analyst estimates but weaker than expected revenues.

Fellow Dow component 3M (MMM) has also moved to the downside even though the industrial conglomerate reported third quarter earnings that exceeded expectations.

On the other hand, shares of General Motors (GM) have spiked by 7.7 percent after the auto giant reported better than expected third quarter results.

Sector News

Computer hardware stocks have shown a substantial move to the downside on the day, dragging the NYSE Arca Computer Hardware Index down by 2.9 percent.

Logitech (LOGI) has helped lead the sector lower, with the computer accessories maker plunging by 9.8 percent despite reporting better than expected fiscal second quarter results.

Significant weakness is also visible among housing stocks, as reflected by the 2.7 percent slump by the Philadelphia Housing Sector Index. The index is pulling back further off the record closing high set last Friday.

Steel and networking stocks are also seeing notable weakness on the day, while software and gold stocks have shown strong moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index slumped by 1.4 percent, while China’s Shanghai Composite Index climbed by 0.5 percent.

Meanwhile, the major European markets are little changed on the day. While the French CAC 40 Index is just above the unchanged line, the U.K.’s FTSE 100 Index and the German DAX Index are both just below the unchanged line.

In the bond market, treasuries have shown a lack of direction over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 4.190 percent.

Business News