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Wall Street closed slightly lower on Tuesday to wrap up a disappointing February. Fears of an impending recession resulting from the Fed’s tightening of monetary policy continue to haunt the market. The benchmark 10-year U.S. treasury note briefly hit its highest level since November. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.7% or 232.39 points to close at 32,656.7. Nineteen components of the 30-stock index ended in negative territory, while 11 ended in positive.
The S&P 500 lost 0.3% or 12.09 points to close at 3,970.15. Seven of the 11 broad sectors of the benchmark index ended in negative territory. The Utilities Select Sector SPDR (XLU), the Energy Select Sector SPDR (XLE) and the Consumer Staples Select Sector SPDR (XLP) fell 1.8%, 1.4% and 0.8%, respectively, while the Materials Select Sector SPDR (XLB) advanced 0.5%.
The tech-heavy Nasdaq dropped 0.1% or 11.44 points to finish at 11,455.54.
The fear-gauge CBOE Volatility Index (VIX) was down 1.2% to 20.70. A total of 11.6 billion shares were traded on Tuesday, higher than the last 20-session average of 11.5 billion. Decliners outnumbered advancers on the NYSE by a 1.13-to-1 ratio. On Nasdaq, a 1.03-to-1 ratio favored advancing issues.
10-Year Treasury Yield Touches Highest Level Since November
The benchmark U.S. 10-year treasury yield advanced more than 50 basis points in February, on the basis of traders increasingly betting on the Fed to keep raising rates for much longer than expected. Recently, a slew of economic data has shown that inflation is still at an alarming level. Also, a resilient labor market has led to the belief that the central bank would infer that it needs further policy tightening to bring inflation down to its target rate of 2%.
The yield on the 10-year Treasury note fell by 1 basis point to end the session at 3.912%. However, it briefly touched a high of 3.983%, its highest level since Nov 10. Simultaneously, the yield on the 30-year note rose less than 1 basis point to 3.922%, while the 2-year bond yield advanced slightly to 4.801%.
Yields from treasury bonds move inversely to prices. Higher bond yields have a negative effect on stocks because they push down the relative value of earnings from these stocks in the future. Especially in an economy expected to go into recession, higher bond yields suggest that stocks are currently overvalued, and investors rush to the safety of the bond market.
The Conference Board reported that the consumer confidence index decreased in February for the second consecutive month. The index now stands at 102.9, down from 106.0 in January.
Chicago PMI came in at 43.6 for February, decreasing from the unrevised 44.3 from January.
Case-Shiller Home Prices for the 10-City and 20-City composites both declined 0.8% and 0.9%, respectively, in December. The 10-City number was revised to a decrease of 0.6% from the previously reported decrease of 0.7% in November. For the 20-City composite, the November number remained unrevised.
Monthly Roundup
Despite a blockbuster start to the year in January, all three major indexes closed out a disappointing February on Tuesday. The Dow ended 4.2% lower for the month, while the S&P 500 and Nasdaq Composite dropped 2.6% and 1.1%, respectively. Throughout the month, trade has been volatile on fears that continued interest rate hikes by the Fed would land the economy in a soup.
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Stock Market News for Mar 1, 2023
Wall Street closed slightly lower on Tuesday to wrap up a disappointing February. Fears of an impending recession resulting from the Fed’s tightening of monetary policy continue to haunt the market. The benchmark 10-year U.S. treasury note briefly hit its highest level since November. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.7% or 232.39 points to close at 32,656.7. Nineteen components of the 30-stock index ended in negative territory, while 11 ended in positive.
The S&P 500 lost 0.3% or 12.09 points to close at 3,970.15. Seven of the 11 broad sectors of the benchmark index ended in negative territory. The Utilities Select Sector SPDR (XLU), the Energy Select Sector SPDR (XLE) and the Consumer Staples Select Sector SPDR (XLP) fell 1.8%, 1.4% and 0.8%, respectively, while the Materials Select Sector SPDR (XLB) advanced 0.5%.
The tech-heavy Nasdaq dropped 0.1% or 11.44 points to finish at 11,455.54.
The fear-gauge CBOE Volatility Index (VIX) was down 1.2% to 20.70. A total of 11.6 billion shares were traded on Tuesday, higher than the last 20-session average of 11.5 billion. Decliners outnumbered advancers on the NYSE by a 1.13-to-1 ratio. On Nasdaq, a 1.03-to-1 ratio favored advancing issues.
10-Year Treasury Yield Touches Highest Level Since November
The benchmark U.S. 10-year treasury yield advanced more than 50 basis points in February, on the basis of traders increasingly betting on the Fed to keep raising rates for much longer than expected. Recently, a slew of economic data has shown that inflation is still at an alarming level. Also, a resilient labor market has led to the belief that the central bank would infer that it needs further policy tightening to bring inflation down to its target rate of 2%.
The yield on the 10-year Treasury note fell by 1 basis point to end the session at 3.912%. However, it briefly touched a high of 3.983%, its highest level since Nov 10. Simultaneously, the yield on the 30-year note rose less than 1 basis point to 3.922%, while the 2-year bond yield advanced slightly to 4.801%.
Yields from treasury bonds move inversely to prices. Higher bond yields have a negative effect on stocks because they push down the relative value of earnings from these stocks in the future. Especially in an economy expected to go into recession, higher bond yields suggest that stocks are currently overvalued, and investors rush to the safety of the bond market.
Consequently, shares of UnitedHealth Group Incorporated (UNH - Free Report) and The Procter & Gamble Company (PG - Free Report) dropped 1.5% and 1.1%, respectively. Procter & Gamble carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Conference Board reported that the consumer confidence index decreased in February for the second consecutive month. The index now stands at 102.9, down from 106.0 in January.
Chicago PMI came in at 43.6 for February, decreasing from the unrevised 44.3 from January.
Case-Shiller Home Prices for the 10-City and 20-City composites both declined 0.8% and 0.9%, respectively, in December. The 10-City number was revised to a decrease of 0.6% from the previously reported decrease of 0.7% in November. For the 20-City composite, the November number remained unrevised.
Monthly Roundup
Despite a blockbuster start to the year in January, all three major indexes closed out a disappointing February on Tuesday. The Dow ended 4.2% lower for the month, while the S&P 500 and Nasdaq Composite dropped 2.6% and 1.1%, respectively. Throughout the month, trade has been volatile on fears that continued interest rate hikes by the Fed would land the economy in a soup.