US stocks retreated for a third day, weighed down by rising bond yields and the threat of entrenched inflation. Semiconductor shares erased an afternoon rebound, with Nvidia Corp. declining ahead of results due Wednesday.
The S&P 500 Index fell 0.7%, while the tech-heavy Nasdaq 100 Index lost 0.6%. The Philadelphia Stock Exchange Semiconductor Index, known as the SOX, was little changed, down from an earlier gain of 1.9%. The retail-favored Roundhill Memory ETF, ticker DRAM - a proxy for memory stocks - rose 0.9%.
The S&P 500 had ended a choppy Monday session slightly below where it started, as rising yields, hot inflation and elevated oil prices curb investors' appetite. Treasury yields continued their ascent Tuesday, with the 30-year benchmark approaching 5.20% and the 10-year rising past 4.65%.
The leg up in yields "drives the cost of capital higher which will damp equity valuations during a week when investors will get a number of consumer bellwethers," RSM economist Joseph Brusuelas said.
The S&P 500 has shed about 2% during its three-day losing streak. On Tuesday, index decliners beat gainers by about 1.7 times.
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Offering contrarian advice, BTIG Chief Market Technician Jonathan Krinsky recommended underperforming consumer-linked stocks. "When something doesn't do what you would expect it to do, it's worth paying attention," he wrote. "Many restaurants and consumer names are higher today despite the move in rates and crude," he said, flagging the potential for a "counter-trend bounce" in stocks like Nike Inc. and Tractor Supply Co.
Beaten-down software stocks had advanced earlier on Tuesday, but the iShares Expanded Tech-Software Sector ETF, ticker IGV, erased those gains to fall 1%. Software's risk-reward ratio is "still attractive given the sizable underperformance since October," Fundstrat head of research Thomas Lee wrote. The IGV was down about 19% since the end of September as of Monday's close, while the SOX index had rallied 77%.
Eye on OilWest Texas Intermediate crude oil was down about 0.8% at around $108. President Donald Trump threatened to resume strikes on Iran in the coming days as part of the push for a deal to end the war. On Monday he had called off a new bombardment of Iran after Saudi Arabia and other Persian Gulf allies wanted more time to pursue diplomacy. That helped ease oil prices, though crude is still up more than 50% since the hostilities began, serving as an inflationary accelerant. "Stagflationary macroeconomic environments don't necessarily hobble a country's stock market," Ed Yardeni, president and chief investment strategist at Yardeni Research, wrote in a Tuesday note. That's as long as "companies can grow profit margins nonetheless." For some market watchers, doubts are creeping in. "We're not bearish yet, but becoming increasingly more cautious on the second half," Wells Fargo Securities equity analyst Ohsung Kwon wrote in a note. He cited increasing supply of stocks due to initial public offerings, along with risk from the midterm elections, inflation and fiscal pressure. Kwon noted that the S&P 500 fell more than 10% in the second half of midterm years 71% of the time, versus 44% in other years. Home Depot Inc. swung from losses to gains after reporting mixed earnings, with comparable sales missing expectations. Business has been hurt by elevated interest rates and high housing prices, and as shoppers defer large projects. Citigroup Inc. fell 2.0% after a downgrade from CFRA's Kenneth Leon. He wrote that the Iran conflict "could trigger tail risks including inflationary pressures and lower consumer confidence." If the US economy were to slow, borrowing would likely ease, hurting credit card income and commercial loan activity. Sectors in FocusRetail stocks, after Home Depot and Amer Sports Inc. reported results. Amer Sports shares rose 2% after it raised full-year guidance and first-quarter results beat estimates. Lowe's Cos., Target Corp. and TJX Cos. are due to release results on Wednesday. Target's 26% rally this year has raised the bar heading into results. Space-linked stocks as SpaceX was said to be seeking to file publicly for its long-awaited IPO as soon as Wednesday. Tesla Inc. slipped 1.4%. Bloomberg Magnificent Seven stocks fell. Alphabet Inc.'s Google said its AI Mode has surpassed a billion monthly active users globally and AI Mode queries have more than doubled every quarter since launch a year ago. Earlier, Google agreed to create an AI cloud business with Blackstone Inc. ALSO READ: 'Funding For Terrorism': US Sanctions Networks Behind Billions In Illegal Iranian Oil Transactions |
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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