Financial companies led a modest slide by stocks on Wall Street as a mixed batch of company earnings and declining bond yields weighed on the market and more in Tuesday’s Stock Market Update.
The selling pulled every major sector lower on Tuesday, snapping a three-day winning streak for the S&P 500.
Banks took the biggest losses as investors reacted to another drop in long-term bond yields. The yield on the 10-year Treasury note slipped to 1.55% from 1.59% late Monday. Lower bond yields mean lower interest rates on loans and lower profits for banks. Bank of America dropped 2%.
Technology stocks, which like banks have tended to lead the market’s gains recently, gave up an early gain. Western Digital dropped 1.8%. Still, some chipmakers continued to rise on news Monday that the U.S. gave Chinese telecom giant Huawei an extension to buy more supplies from U.S. companies. Qualcomm added 1.6%.
Household goods makers and communication services stocks were among the decliners. Energy stocks also fell.
Some big retailers, homebuilders and restaurant chains bucked the trend, notching gains. Lowe’s rose 3% and homebuilder Lennar gained 1.8%.
Home Depot climbed after the home improvement retailer reported earnings that topped Wall Street’s forecasts. But two other big retailers didn’t fare as well. Investors sent Kohl’s and TJX lower after their latest quarterly report cards fell short of analysts’ expectations.
The market was coming off a three-day winning streak, the latest twist for stocks, which have been caught in the grips of volatile trading all month.
STOCK MARKET UPDATE
KEEPING SCORE: The S&P 500 fell 23 points, or 0.8%, to 2,900. The Dow Jones Industrial Average lost 173 points, or 0.7%, to 25,962. The Nasdaq fell 54 points, or 0.7%, to 7,948.
ANALYST’S TAKE: “The market is taking a little bit of a breather here,” said Tony Roth, chief investment officer at Wilmington Trust. “You’re getting just a little bit of consolidation after the rally we’ve had over the last three or four days.”
As part of that consolidation, many traders are shifting money from stocks toward bonds and other fixed-income assets, Roth added.
LET’S REMODEL: Home Depot jumped 4.4% after the home improvement retailer reported earnings that topped Wall Street’s forecasts. The company also cut its sales expectations for the year as lumber prices slid and the company braces for the potential impact of tariffs on its customers.
TURNOUT TROUBLES: Kohl’s fell 6.8% after the department store reported a sharper than expected decline in sales at established locations during the second quarter.
FEELING HEALTHY: Medtronic gained 2.6% after the medical device maker jumped past Wall Street’s fiscal first quarter financial expectations and raised its profit forecast for the year.
FED WATCH: Investors are hoping to glean new insight this week into the Federal Reserve’s willingness to make further interest rate cuts.
The central bank is releasing the minutes from last month’s meeting of policymakers Wednesday. Two days later, Fed Chairman Jerome Powell is scheduled to deliver a speech at the central bank’s annual conference in Jackson Hole, Wyoming.
Investors are hoping the Fed will continue to cut interest rates to shore up economic growth. The Fed lowered interest rates by a quarter-point at its last meeting, the first cut in a decade.
“Coming into this meeting Friday for the speech, the market is really going to be looking for something that suggests that (Powell) has changed his approach and that this is going to be more of a systematic lowering of interest rates,” Roth said. “He may not provide what the market wants.”
EYE ON THE ECONOMY: Investors are also trying to parse conflicting signals on the U.S. economy and determine whether a recession is looming. A key concern is that the escalating and costly trade conflict between the world’s two biggest economies will hamper growth around the globe.
Earlier this month, President Donald Trump announced plans to extend tariffs across virtually all Chinese imports, many of them consumer products that were exempt from earlier rounds of tariffs.
Although many of the tariffs have been delayed, the founder of Chinese tech giant Huawei said Tuesday he expects no relief from U.S. export curbs due to the political climate in Washington. He expressed confidence the company will thrive because it develops its own technology.
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