US Stocks Resume Declines As Treasury Yields Kick Higher, Chipmakers Extend Downside: What's Driving Markets Tuesday?

Tuesday sees a risk-averse sentiment prevailing in the equity markets, with every sector on Wall Street showing losses as investors await Wednesday’s FOMC meeting.

As the Federal Reserve is widely expected to maintain current interest rates, there is growing concern about the possibility of more hawkish remarks regarding the future. This concern arises from renewed inflationary pressures driven by a rapid surge in oil prices.

WTI crude oil held steady at $91 per barrel after briefly reaching $92.25 during early European trading hours.

In the meantime, Treasury yields continue to rise, with the 10-year benchmark surging to 4.34%, reaching its highest level since October 2007.

Cues From Tuesday’s Trading:

The S&P 500 fell 0.8%, while both the Nasdaq 100 and the Dow Jones Industrial Average slipped 0.9%.

Surprisingly, small caps fared relatively better in a risk-off day, with the Russell 2000 index down 0.6%.

US Index Performance On Tuesday

Tuesday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.8% lower to $440.22.
• The SPDR Dow Jones Industrial Average ETF DIA fell 0.9% to $343.13.
• The Invesco QQQ Trust QQQ dropped 0.9% to $367.49, according to Benzinga Pro data.

Looking at S&P 500 sectors:

• The Consumer Discretionary Select Sector SPDR Fund XLY was the worst performer, down 1.2% for the day. A similar performance was observed in both the Energy Select Sector SPDR Fund XLE and the Industrials Select Sector SPDR Fund XLI.
• The Utilities Select Sector SPDR Fund XLU showed the best relative performance, but was still down 0.3%.

Latest Economic Data:

The Commerce Department announced that building permits saw a significant increase of 6.9% in August, reaching a seasonally adjusted annual rate of 1.543 million. This marks the highest level in 10 months and surpasses market expectations of 1.443 million permits.

On the other hand, housing starts experienced a sharp decline, falling by 11.3% on a month-over-month basis. This resulted in a seasonally adjusted annualized rate of 1.283 million, marking the lowest level since June 2020 and significantly below the expected forecast of 1.44 million.

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Stocks In Focus:

• Enphase Energy, Inc. ENPH saw a 5% increase in its stock price following the company’s announcement that its installers in Australia have reported a growing adoption of Enphase Energy Systems.
• United States Steel Corporation X rose over 1% in premarket trading following a positive preannouncement.
• Nio, Inc. NIO shed about 15% in reaction to its $1 billion convertible note offering.
• CBOE Global Markets, Inc. CBOE surged 4% after CEO Edward T. Tilly resigned. Fredric J. Tomczyk, former CEO of TD Ameritrade Holding, steps in as the new CEO.
• Walt Disney DIS experienced a 3% drop in its stock price after revealing intentions to nearly double its investment in the parks, experiences and products segment over the next decade,
• Steelcase, Inc. SCS will report its quarterly results after the close.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.3%, with a barrel of WTI-grade crude trading at $90.70. The United States Oil Fund ETF USO was flat at $81.43.  

Treasury yields were higher, with the 10-year yield up by 2 basis points to 4.33% and the two-year yield up by 3 basis points to 5.08%. The iShares 20+ Year Treasury Bond ETF TLT was 0.1% lower for the day. 

The U.S. dollar index, as tracked by the Invesco DB USD Index Bullish Fund ETF UUP, held steady. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was also flat at 1.0684.

European equity indices had a mixed day, with Germany shares underperforming. The SPDR DJ Euro STOXX 50 ETF  FEZ fell 0.1%. 

Gold edged 0.1% down to $1,930/oz, while silver fell 0.4% to $23.14. Bitcoin BTC/USD was 1.5% higher to $27,167.

Staff writer Piero Cingari updated this report midday Thursday. 

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