Traders work on the floor of the New York Stock Exchange on Oct. 22, 2024.
Spencer Platt | Getty Images
The S&P 500 and the Dow Jones Industrial Average ended Tuesday marginally lower, as investors grappled with persistent concerns about an uptick in interest rates and digested this week’s latest earnings reports.
The S&P 500 ended the session lower by 0.05%, closing at 5,851.20. It was the broad market index’s first back-to-back loss since early September. The 30-stock Dow slid 6.71 points, or 0.02%, ending at 42,924.89 and posting a second straight losing day. The Nasdaq Composite outperformed with a gain of 0.18% to 18,573.13.
Dow Jones Industrial Average 1-day move.
The U.S. 10-year Treasury note yield earlier climbed above 4.2% for the first time in about three months before slightly pulling back from that level. Cautious commentary from Federal Reserve officials on the path of interest rate cuts has pushed yields higher.
Yields have actually increased since the Fed cut by a half point a month ago. Part of that move can be attributed to improving economic data, but some of that increase is due to pessimism the Fed won’t be as aggressive with rate cuts moving forward. Traders see a 91% chance of a quarter-point cut at the Fed’s next meeting ending Nov. 7, according to the CME’s FedWatch Tool based on fed funds futures trading.
Homebuilding stocks dropped on persistent higher-for-longer rate concerns, with Lennar and D.R. Horton each losing more than 3%.
“The market had moved into overbought territory, making it vulnerable to anything it perceives as negative … It’s now worried that the Fed has not declared victory on inflation, and not to mention, the concerns post-election,” said LPL Financial chief global strategist Quincy Krosby.
Traders are also eyeing a fresh slate of earnings reports that are set to come out this week, including Tesla and Coca-Cola on Wednesday and Honeywell on Thursday.
On Tuesday, General Motors jumped nearly 10% after topping Wall Street’s third-quarter expectations and raising its full-year guidance. Philip Morris also soared roughly 10% after the Marlboro maker raised its annual profit forecast, while Verizon shed 5% after its total revenue just missed analysts’ forecast. Lockheed Martin shares dipped 6% after the military contractor posted lower-than-expected quarterly sales.
So far, roughly one-fifth of companies in the S&P 500 have reported results, with the majority topping earnings estimates, according to FactSet.
The market has been on a hot streak in October with the S&P 500 reaching a record and stretching its year-to-date gain to beyond 22%.