U.S. stocks fell Tuesday, with the Nasdaq Composite leading the way down after the previous session’s technology sector gains, as investors kept a close eye on plans for more sanctions on Russia and remarks by Federal Reserve policy makers.
Shares of Twitter Inc. TWTR, 2.30% remained in the spotlight for a second day after the company named Tesla Inc. TSLA, -4.37% chief Elon Musk to its board of directors.
How are stock indexes trading?
- The Dow Jones Industrial Average DJIA, -0.31% was down 45 points, or 0.1%, at 34,872.
- The S&P 500 SPX, -0.79% fell 26 points, or 0.5%, to 4,556.
- The Nasdaq Composite COMP, -1.97% fell 247 points, or 1.7%, to 14,285.
On Monday, the S&P 500, Dow and Nasdaq ended higher, led by gains for tech-related shares.
What’s driving the markets?
Stocks saw a mixed start, but soon turned lower across the board following remarks by Fed Gov. Lael Brainard, who indicated policy makers could begin aggressively shrinking the size of the central bank’s balance sheet as early as its next meeting in May.
The Fed will “continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting,” Brainard said at a conference sponsored by the regional Fed bank in Minneapolis.
Investors were also monitoring the continuing war in Ukraine and U.S. economic data.
Ukraine President Volodimir Zelensky addressed the UN Security Council on Tuesday, following evidence of images and reports of atrocities allegedly committed by Russian soldiers around Kyiv, including the suburban city of Bucha.
“With geopolitics at the forefront of investors’ minds, the next few days could be rough and rocky for global markets. The devastation in Bucha has prompted not only the European Union but also world leaders to discuss new sanctions on Russia,” said Lukman Otunuga, senior research analyst at FXTM, in a note.
“As ongoing geopolitical risks fuel uncertainty and trigger volatility, this could sap risk sentiment, extending further support to safe haven assets,” he said.
Meanwhile, the U.S. Treasury has reportedly put a stop to Russia paying its debts via U.S. accounts, while the European Union was expected to consider a ban on coal imports from the country.
Both U.S. CL.1, -0.65% and benchmark European oil prices BRN00, -0.62% lost ground after initially finding support on the prospect of additional sanctions.
“The overall environment remains hard to read as investors’ focus keeps being torn between lingering tensions with Russia, the prospect of an economic downturn brought by flattening yield curves and the sudden hawkish switch from the Fed,” said Pierre Veyret, technical analyst at ActivTrades.
Treasury yields extended a rise after Brainard’s comments, while the yield on the 10-year Treasury note TMUBMUSD10Y, 2.559% moved slightly above that of the 2-year note TMUBMUSD02Y, 2.522%, undoing a recent inversion of that curve. Yield curve inversion, when that of shorter-dated notes are higher than longer-dated, are often viewed as a recession flag.
Among U.S. data for Tuesday, the February foreign trade deficit fell 0.1% to $89.2 billion after an all-time high in January. Economists polled by The Wall Street Journal had forecast a $88.5 billion trade gap.
The Institute for Supply Management said its index of business conditions at service-oriented companies rose 1.8 points in March to 58.3%, rebounding from an omicron-induced slowdown and in line with forecasts. Readings above 50% are viewed as positive, with anything above 55% seen as exceptional.
Which companies are in focus?
- Twitter shares rose 6.3% after the announcement of Musk’s appointment to the board. Shares jumped 27.1% for their best single-day gain ever on Monday after a regulatory filing revealed Musk had taken a 9.2% stake in the social-media platform.
- Exxon Mobil Corp. XOM, 0.20% said in a filing late Monday that its first-quarter profit could top $9 billion, due partly to billions more from rising crude prices. Shares rose 0.5%. Exxon CEO Darren Woods will be among oil-company executives due to testify before a House hearing Wednesday on gasoline-price gouging.
What are other assets doing?
- The ICE U.S. Dollar Index DXY, 0.36% rose 0.3%.
- Bitcoin BTCUSD, -0.94% fell 1.7% to trade below $46,000.
- Gold futures GC00, -0.44% fell 0.2% to trade near $1,930 an ounce.
- The Stoxx Europe 600 SXXP, +0.19% rose 0.2%, while London’s FTSE 100 UKX, +0.72% gained 0.7%.
- Japan’s Nikkei 225 NIK, +0.19% rose 0.2%.