The Dow fell nearly 1%, the S&P 500 also slipped, and the Nasdaq declined more than 1% as technology stocks contributed to recent declines
Stock futures opened higher Tuesday evening to recover some losses from earlier in the day.
During the regular session, the Dow fell more than 300 points, or nearly 1%, for its worst session in nearly three weeks. The S&P 500 also slipped, and the Nasdaq declined more than 1% as technology stocks contributed to recent declines.
Many of the cyclical stocks that had led markets higher for much of the last three months underperformed, and the industrials, energy and financials sectors lagged.
Treasury yields steadied, and the benchmark 10-year yield retreated to nearly 1.62% from last week’s high of over 1.75%.
I think what we’ve seen over the past couple days is some end-of-quarter positioning, Tom Essaye, Sevens Report Research founder, told Yahoo Finance. The best performers quarter-to-date are getting sold right now, some of the worst performers are rallying. That’s typical as we end a quarter.
But then also, the outlook on COVID has dimmed a bit – not so much here in the United States, but definitely in Europe, where they seem to be experiencing a third wave, he added. The vaccine rollout there is not going so well as we know, and now you’re seeing increased lockdowns.
Investors have also been digesting remarks from a number of Federal Reserve speakers this week. Much of the commentary has served to reinforce the central bank’s stance that any inflation appearing this year will be transitory, and not significant enough to warrant a shift in their monetary policy positioning.
Last week, the Federal Reserve’s updated projection material showed the median forecast among Federal Open Market Committee participants is still to keep benchmark interest rates near zero through at least 2023.
Federal Reserve Chair Jerome Powell told the U.S. House Committee on Financial Services on Tuesday that he expects a temporary increase in inflation in the coming months compared to the same period last year, but that the forthcoming rises will be short-lived since so many Americans will still be out of work as the economy recovers from the pandemic.
Other members of the Federal Open Market Committee echoed similar sentiments.
Federal Reserve Governor Lael Brainard said during a virtual event Tuesday that “it will take some time to achieve substantial further progress” on the Fed’s goals of achieving maximum employment and sustainable 2% inflation.
She advocated “a patient approach based on outcomes rather than a preemptive approach based on the outlook” as a more efficient means of achieving the central bank’s goals, suggesting the Fed would stay the course even as prospects of a jump in inflation spook some market participants.
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