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Wall Street closed sharply lower on Tuesday, dragged down by tech and discretionary stocks. Investors remained apprehensive that the Fed would keep the interest rates higher for longer. Benchmark treasury yields hit 16-year highs. All of the three major stock indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 1.3% or 430.97 points to close at 33,002.38. Twenty-two components of the 30-stock index ended in negative territory, while eight ended in positive.
The tech-heavy Nasdaq Composite dropped 248.31 points or 1.9% to close at 13,059.47.
The S&P 500 lost 58.94 points, or 1.4%, to close at 4,229.45. Ten of the 11 broad sectors of the benchmark index closed in the red, while one ended in the green. The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) lost 2.4%, 1.8% and 1.7%, respectively, while the Utilities Select Sector SPDR (XLU) added 1.2%.
The fear-gauge CBOE Volatility Index (VIX) increased 12.3% to 19.78. A total of 10.8 billion shares were traded on Monday, higher than the last 20-session average of 10.5 billion. Decliners outnumbered advancers on the NYSE by a 4.61-to-1 ratio. On the Nasdaq, declining issues led advancers by 2.43-to-1.
JOLTS Report Posts Highest Openings in Two Years
The Labor Department published its Job Openings and Labor Turnover Survey (JOLTS) report on Tuesday. The August figures showed that the labor market had snapped three straight monthly declines in job openings.
Job openings were up 690,000 to 9.61 million in August, the most in just over two years. Data for July was revised higher to show 8.92 million against the previously reported 8.83 million. Also, there were 1.51 job openings for every unemployed person in August, slightly down from 1.53 in July.
Although these numbers show a robust labor market scenario, we are currently back again in the “good news is bad news” mode. Investors remain apprehensive that a tight labor market would force the Fed’s hand and it would continue to keep interest rates high. Throughout September, the market has been plagued by the fear of an impending recession that the central bank would not be able to avert. The JOLTS report, which was released just ahead of Friday’s U.S. monthly jobs report, adds to that fear.
Treasury Yields Hit 16-Year Highs
The benchmark U.S. 10-year Treasury yield touched 4.8%, hitting its highest level in 16 years. The 30-year Treasury yield hit 4.925%, also the highest since 2007. Treasury yields have been rising in recent weeks on fear that the Fed would continue to keep the interest rates at a higher level.
Climbing treasury yields indicate an economic slowdown, and investors rush from the stock market to the safety of bond markets. In such an environment, growth stocks like tech appear currently over-valued with respect to their prospects and are sold off. Tech and consumer discretionary were two of the worst-hit sectors of the day.
Image: Bigstock
Stock Market News for Oct 4, 2023
Wall Street closed sharply lower on Tuesday, dragged down by tech and discretionary stocks. Investors remained apprehensive that the Fed would keep the interest rates higher for longer. Benchmark treasury yields hit 16-year highs. All of the three major stock indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 1.3% or 430.97 points to close at 33,002.38. Twenty-two components of the 30-stock index ended in negative territory, while eight ended in positive.
The tech-heavy Nasdaq Composite dropped 248.31 points or 1.9% to close at 13,059.47.
The S&P 500 lost 58.94 points, or 1.4%, to close at 4,229.45. Ten of the 11 broad sectors of the benchmark index closed in the red, while one ended in the green. The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) lost 2.4%, 1.8% and 1.7%, respectively, while the Utilities Select Sector SPDR (XLU) added 1.2%.
The fear-gauge CBOE Volatility Index (VIX) increased 12.3% to 19.78. A total of 10.8 billion shares were traded on Monday, higher than the last 20-session average of 10.5 billion. Decliners outnumbered advancers on the NYSE by a 4.61-to-1 ratio. On the Nasdaq, declining issues led advancers by 2.43-to-1.
JOLTS Report Posts Highest Openings in Two Years
The Labor Department published its Job Openings and Labor Turnover Survey (JOLTS) report on Tuesday. The August figures showed that the labor market had snapped three straight monthly declines in job openings.
Job openings were up 690,000 to 9.61 million in August, the most in just over two years. Data for July was revised higher to show 8.92 million against the previously reported 8.83 million. Also, there were 1.51 job openings for every unemployed person in August, slightly down from 1.53 in July.
Although these numbers show a robust labor market scenario, we are currently back again in the “good news is bad news” mode. Investors remain apprehensive that a tight labor market would force the Fed’s hand and it would continue to keep interest rates high. Throughout September, the market has been plagued by the fear of an impending recession that the central bank would not be able to avert. The JOLTS report, which was released just ahead of Friday’s U.S. monthly jobs report, adds to that fear.
Treasury Yields Hit 16-Year Highs
The benchmark U.S. 10-year Treasury yield touched 4.8%, hitting its highest level in 16 years. The 30-year Treasury yield hit 4.925%, also the highest since 2007. Treasury yields have been rising in recent weeks on fear that the Fed would continue to keep the interest rates at a higher level.
Climbing treasury yields indicate an economic slowdown, and investors rush from the stock market to the safety of bond markets. In such an environment, growth stocks like tech appear currently over-valued with respect to their prospects and are sold off. Tech and consumer discretionary were two of the worst-hit sectors of the day.
Consequently, shares of ON Semiconductor Corporation (ON - Free Report) and The Walt Disney Company (DIS - Free Report) shed 3.9% and 2.6%, respectively. ON Semiconductor carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.