US stocks fell, increasing their losses in April as investors took advantage of profit reports from leading companies and weighed concerns about inflation and the spread of Covid-19 in China.
The S&P 500 fell 1.9 percent in trading on Tuesday afternoon, a day after technology stocks rose major indexes. The Dow Jones Industrial Average fell 1.6 percent, while the tech Nasdaq Composite lost about 3 percent. Ten of the 11 sectors of the S&P 100 were recently in the red, with consumer discretionary and technological actions being among the leading declines.
All three indexes are on track to lose positions this month, with the Nasdaq currently down more than 11%.
Fears of a resumption of Covid-19 in China and severe restrictions imposed to fight the outbreak there have heightened investors’ fears about the global economy and sparked volatile trade in recent sessions. Rising inflation weighs heavily on companies and consumers, while the Federal Reserve’s indications that it will tighten monetary policy quickly threaten to stifle growth.
“We are now in a global tightening cycle, so we need to let go of many of these assets,” said Mace McCain, chief investment officer at Frost Investment Advisors.
Assets seen as a haven in times of difficulty, such as government bonds, have been squeezed by inflation and expectations of tighter central bank policies, along with equities, making it difficult for investors seeking shelter during the recent instability. Gold, another refuge, rose 0.4 percent on Tuesday, but prices remain close to their lowest level since February.
Yields on 10-year US government bonds fell to 2.761% from 2.825% on Monday. The yield on the reference note remains close to its highest level since 2018, as investors have sold bonds in anticipation of higher interest rates. Bond yields increase as prices fall.
“We’ve had a beautiful scenario over the last 18 months: Growth has been accelerating and bond yields have been falling – the perfect combination for risky assets,” said Hani Redha, portfolio manager at PineBridge Investments. “Now we have the complete opposite.”
In the earnings news, General Electric fell more than 11 percent after warning that supply chain disruptions would put pressure on its business this year. Universal Health Services lost nearly 10 percent after the hospital operator said profits fell 27 percent in the first quarter from a year ago.
United Parcel Service fell more than 3%. The company said quarterly revenue increased by more than 6%, although it sent fewer packages than in the previous quarter. 3M, which reported better-than-expected sales for the first quarter, fell 3%.
Shares of Arch Resources rose nearly 20 percent after the coal company reported profits and revenues that exceeded expectations. Sherwin-Williams added more than 9% to stronger-than-expected earnings and revenue for the first quarter.
Tesla, whose shares jumped last week after the electric vehicle maker reported quarterly results, recently fell 9.6 percent, falling below the levels last seen in late March. The shares are part of the discretionary sector of consumers of the S&P 500, which fell by about 4%.
Microsoft, Alphabet, the parent of Google, GOOG -1.83% General Motors, Visa and Mondelez International will report profits after closing the markets.
The technology sector of the S&P 500 fell 2.6% on Tuesday afternoon. The shift in consumer spending from technology-oriented goods to personal services in the final phase of the pandemic weighs on investor enthusiasm for the sector, analysts said.
“Now we can realize that the group has grown a lot, your technology companies, that growth may have been too extrapolated,” said Jason Pride, director of private wealth investment at Glenmede.
The Federal Reserve’s main tool is to change the rate of federal funds, which can affect not only consumer borrowing costs but also shape broader decisions by companies, such as how many people to hire. The WSJ explains how the Fed manipulates this single interest rate to run the entire economy. Illustration: Jacob Reynolds
Brent crude futures rose 3.5 percent to $ 105.71 a barrel. The international oil benchmark fell below $ 100 on Monday before recovering. US oil prices, known as the West Texas Intermediate, rose 4.2 percent to $ 102.69 a barrel on Tuesday.
In economic news, consumer confidence in the United States fell slightly in April, the Conference Board said Tuesday. Orders for durable goods – consumer products designed to last more than three years – recovered in March after a weak February.
S&P CoreLogic Case-Shiller’s national housing price index, a measure of average housing prices in major US urban areas, rose 19.8% in the year ended February from 19.1% year on year. Higher prices and rising interest rates on mortgages are expected to weigh on home sales this year. New home sales fell 12.6 percent in March from a year earlier, the trade ministry said on Tuesday.
Abroad, the Stoxx Europe 600 ended the day down 0.9%.
In mainland China, the Shanghai Composite Index fell 1.4 percent for the second day in a row as investors continued to worry about the threat of new Covid-19 blockades. The People’s Bank of China pledged to boost support for the economy on Tuesday in a bid to calm concerns, but the move had only a temporary effect on local markets.
On Monday, traders worked on the floor of the New York Stock Exchange.
Photo: Spencer Platt / Getty Images
“I don’t see any catalyst for rising prices until we make some tangible, meaningful moves on the policy front,” said John Woods, chief investment officer for the Asia-Pacific region at Credit Suisse, citing Chinese stocks.
Elsewhere in Asia, Tokyo’s Nikkei 225 rose 0.4 percent, while South Korea’s Kospi rose 0.4 percent. The Hong Kong Hang Seng Index rose 0.3%.
-Rebecca Feng contributed to this article.
Write to Will Horner at william.horner@wsj.com and to Orla McCaffrey at orla.mccaffrey@wsj.com
How the biggest companies perform
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
Add Comment