U.S. stocks have been under relentless selling pressure this year, with the benchmark S&P 500 index recording its steepest first-half percentage drop since 1970, as the Federal Reserve moves away from easy-money policy by raising borrowing costs.
Investors are waiting for minutes from the Fed’s meeting in June on Wednesday as they brace for another 75-basis-point rate hike at the end of the month.
Traders are also keeping a watch on economic data, including a June jobs report expected on Friday, and on company commentaries for signs of peaking inflation and cooling economic growth, with another earnings season around the corner.
Data showed new orders for U.S.-manufactured goods increased more than expected in May, reflecting that demand for products remains strong even as the Fed seeks to cool the economy.
Separately, business growth across the euro zone slowed further in June and European natural gas prices surged again, reigniting worries of a recession in the bloc.
“We don’t think we’re gonna have a significant recession (in the United States),” said Jay Hatfield, founder and chief executive of Infrastructure Capital Management in New York. “Employment in the U.S. is very strong. And what almost everyone misses … is that Europe’s loss is our gain.”
Benchmark U.S. Treasury yields tumbled on Tuesday and a key part of the yield curve inverted for the first time in three weeks as economic growth concerns dented risk appetite and increased demand for the safe-haven U.S. debt.
Energy stocks hit five-month lows as recession fears darkened the outlook for oil demand. The materials sector was at a near 1-1/5-year low as a slump in metal prices hit mining shares. [O/R] [MET/L]
“Energy and tech usually trade as negatively correlated and interest rates are rallying so tech is what’s supporting the market here,” Hatfield added.
At 2:05 p.m. EDT, the Nasdaq Composite was up 70.85 points, or 0.64%, at 11,198.70, paring early losses. The Dow Jones Industrial Average fell 436.62 points, or 1.4%, to 30,660.64 and the S&P 500 lost 32.77 points, or 0.86%, to 3,792.56.
Declining issues outnumbered advancing ones on the NYSE by a 2.37-to-1 ratio; on the Nasdaq, a 1.11-to-1 ratio favored decliners.
The S&P 500 posted 1 new 52-week highs and 51 new lows; the Nasdaq Composite recorded 11 new highs and 292 new lows.
(Reporting by Echo Wang in New York; Additional reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Matthew Lewis)