The U.S. stock market is giving back more of its record-setting rally on Tuesday as bond markets rattled by high inflation keep cranking up the pressure.
The S&P 500 fell 0.9 per cent and was on track for a third straight loss after setting its latest all-time high. The Dow Jones Industrial Average was down 233 points, or 0.5 per cent, as of 10:55 a.m. Eastern time, and the Nasdaq composite was 1.3 per cent lower.
That followed mixed moves for stock markets abroad, while oil prices eased in their latest yo-yo move. Falling technology stocks in Asia dragged South Korea’s Kospi down 3.3 per cent, but Germany’s DAX returned 0.4 per cent.
Tech stocks are faltering following huge runs made because of excitement around artificial-intelligence technology, runs that critics said made them too expensive. The stumble comes as oil prices swing on uncertainty about how long the Iran war will keep the Strait of Hormuz closed for oil tankers. That in turn has pushed yields higher in bond markets, which is dragging on economies and all kinds of other financial markets.
The wait is on, meanwhile, for Nvidia to report its latest quarterly results. The chip company is due to report on Wednesday, and it’s routinely blown past analysts’ expectations each quarter. Not only that, it’s provided forecasts for future growth that have consistently topped Wall Street’s.
How it does could determine whether technology stocks and the larger U.S. stock market can maintain their rally. Nvidia fell one per cent Tuesday and was one of the heaviest weights on the S&P 500 because of its immense size.
“Every flow has its ebb,” Rex Feng, Venu Krishna and other strategists at Barclays Capital wrote in a report. They said investors have been pumping more money than usual into U.S. stock funds, which helped fuel “the fastest rebound in decades; now the pendulum could swing backwards.”
Akamai Technolgoies dropped 4.6 per cent for one of Wall Street’s sharper losses after the cybersecurity and cloud computing company said it wants to raise US$2.6 billion through a convertible note offering.
Home Depot rose 0.1 per cent after erasing an early loss following its latest earnings report. Its profit and revenue edged past analysts’ expectations, but an important measure for retailers that looks at performance for stores more than one year old came in below some analysts’ expectations.
CEO Ted Decker said Home Depot saw similar demand from its customers as it did throughout last year “despite greater consumer uncertainty and housing affordability pressure.”
So far, many big U.S. companies have been reporting stronger-than-expected profits for the latest quarter thanks in part to their customers continuing to spend in the face of high gasoline prices and other challenges.
In the bond market, Treasury yields climbed further. The yield on the 10-year Treasury rose to 4.67 per cent from 4.61 per cent late Monday and from less than four per cent before the war with Iran began. That’s a notable increase, and it’s part of a worldwide climb that’s making stock prices look even more expensive and threatening to slow the economy.
Higher yields can drive up rates for mortgages and loans going to companies to build AI data centers, which has been a big source of growth for the economy.
Yields rose even as oil prices eased. The price for a barrel of Brent crude fell 1.5 per cent to US$110.48, though it’s still well above its US$70 level from before the war with Iran.
The average price for a gallon of gasoline rose again overnight to US$4.53, according to the AAA motor club, or about 43 per cent more than it cost last year at this time.
In stock markets abroad, London’s FTSE 100 was close to flat despite a 2.2 per cent drop for Standard Chartered. The bank said Tuesday it plans to reduce over 7,800 roles as it steps up artificial intelligence and automation uses. It’s the latest big company to cite AI as one of the reasons for cutting jobs.
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Stan Choe, The Associated Press. AP Business Writers Yuri Kageyama, Matt Ott and Chan Ho-him contributed to this report.