Investor apprehension grips Wall Street with major indices showing midday losses on Tuesday in New York trading, ahead of the Federal Reserve’s potentially hawkish pivot in Wednesday’s meeting.

The S&P 500 retraced 0.9% after a 2-day positive streak, with the tech-heavy Nasdaq 100 slightly underperforming, down 1.1%. Small caps suffered larger losses, with the iShares Russell 2000 ETF IWM down 1.5%.

The stock market faced renewed pressure as economic data revealed a decline in consumer confidence and persistent wage pressures, putting further pressures on the Federal Reserve.

The Bureau of Labor Statistics reported a 1.2% increase in the employment cost index for the first quarter of 2024, surpassing market expectations of 1% growth and accelerating from the previous three-month period’s 0.9% rise. In April, the Conference Board consumer confidence index dropped from 103.1 to 97 points, falling short of forecasts for a rise to 104.

Bonds provided little refuge to investors as yields surged in response to comments from U.S. Treasury Secretary Janet Yellen, who voiced concerns about the deficit trajectory and proposed substantial measures to address budgetary gaps.

Yields on the 2-year Treasury note breached the psychological 5% threshold, aiming for the highest close since mid-November 2023. The U.S. dollar index (DXY), as tracked Invesco DB USD Index Bullish Fund ETF UUP, rose 0.6%.

Gold tumbled 1.7%, pressured by higher yields and stronger greenback. Bitcoin BTC/USD plummeted over 5%, on track for its worst daily performance in four weeks amid weak sentiment on cryptocurrencies.

Tuesday’s Performance In Major U.S. Indices, ETFs

The SPDR S&P 500 ETF Trust SPY fell 0.9% to $505.30, the SPDR Dow Jones Industrial Average DIA fell 1.1% to $379.75 and the tech-heavy Invesco QQQ Trust QQQ fell 1.1% to $428.01, according to Benzinga Pro data. 

Sector-wise, the Utilities Select Sector SPDR Fund XLU outperformed, up 0.1%, marking the sole positive performance among the eleven S&P 500 sectors. The Energy Select Sector SPDR Fund XLE was the major laggard, down 2.1%.

Tuesday’s Stock Movers

• Tesla Inc. TSLA fell 5%, following a 15% surge Monday on the heels of news potentially clearing the full self-driving service in China. Goldman Sachs tempered some of the excitement in a note on Tuesday.
• Eli Lilly Company LLY rose 4.6%, its strongest one-day gain since early February, as the pharmaceutical giant hiked 2024 revenue forecast.
• Other stocks reacting to earnings were Coca-Cola Company KO, down 0.5%; McDonald’s Corp. MCD, down 0.2%; Eaton Corp. ETN, down 3%; Marathon Petroleum Corp. MPC, down 7.5%; Trane Technologies plc TT, up 5.7%; PayPal Holdings Inc. PYPL, up 1.2%; 3M Company MMM, up 3.2%; Arch Capital Group Ltd. ACGL, up 2.8% and GE Healthcare Technologies Inc. GEHC, down 13.4%.
• Caterpillar Inc. CAT fell 4.2% on news that the company will delist from European exchanges.
• Warner Bros. Discovery Inc. WBD fell 9.3%, hitting the lowest level since February 2009, after reports that the company could lose NBA TV rights to rival Comcast Corp.’s CMCSA NBCUniversal and Amazon.com Inc. AMZN
Notable names reporting after the close are Advanced Micro Devices, Inc. AMD, Amazon.com, Inc., ONEOK, Inc. OKE, Pinterest Inc. PINS, Starbucks Corp. SBUX, Skyworks Solutions, Inc. SWKS, Unum Group UNM. Super Micro Computer, Inc. SMCI, Stryker Corporation SYK, Renaissancere Holdings Ltd. RNR, Prudential Financial, Inc. PRU, Diamondback Energy, Inc. FANG, LPL Financial Holdings Inc. LPLA, Clorox Co CLX and Chesapeake Energy Corp CHK.

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