Dow slides, Nasdaq down 2.6% as fears of a Fed cut make investors nervous

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Stocks fell Tuesday, led lower by steep losses in technology-related stocks, a day after the S&P 500 Index and the Dow Jones Industrial Average got off to a strong start in May, pushing equity benchmarks close of the records. Investors watched comments from US Treasury Secretary Janet Yellen, who said that interest rates could rise a bit if the economy overheats.

How are equity benchmarks performing? The Dow Jones Industrial Average DJIA, -0.19%, fell 99.58 points, or 0.3%, to 34,013.65. The S&P 500 SPX, -0.96%, was down 47.50 points, or 1.1%, to 4,145.16. The Nasdaq Composite COMP, -2.29% fell 354.03 points, or 2.6%, to 13,541.09. On Monday, the Dow advanced 238.38 points, or 0.7%, ending at 34,113.23, its third-highest close in history; the S&P 500 added 11.49 points, or 0.3%, to close at 4,192.66, its second-highest result in its history; while the Nasdaq Composite fell 67.56 points, or 0.5%, ending at 13,895.12, as it registered consecutive declines. What drives the market? Investors focused on Yellen’s comments, in an interview with Atlantic magazine that was recorded Monday and aired Tuesday, saying that interest rates may have to go up a bit to prevent the economy from overheating, but those comments were made in the broader context of a speech in which he also said that inflation would not be a problem. Still, Yellen has drawn attention to market fears around a reduction in central bank asset purchases, a necessary condition before the central bank begins to raise rates. Dallas Fed Chairman Robert Kaplan reiterated the need to discuss reducing bond buying in an interview with MarketWatch. “I’m surprised that she started making these comments. Combine that with Dallas Fed Chairman Kaplan saying it’s time to start talking about phasing out. Right now, confidence is building in the market that the Fed will do something, ”said David Wagner, portfolio manager at Aptus Capital Advisors, in an interview. Tech-related stocks led the move lower on Tuesday, with heavyweights Tesla Inc. TSLA, -2.79%, Google parent Alphabet Inc. GOOG, -2.53% GOOGL, -2 , 38% and Apple Inc. AAPL, -3.92% shares. trading down. See: Epic CEO: Decided to sue Apple due to the ‘negative impact’ of the App Store Investors were weighing the strength of corporate earnings and the economic resurgence of the COVID pandemic against concerns about inflation and concerns of that stock prices don’t have much more. room to run higher given current ratings. MarketWatch’s Mark Hulbert notes that by one measure, stock valuations are above 98% of monthly readings since 1881, and more than double the 140-year average, suggesting an extremely overvalued market. “You see, even with incredible earnings reports, there was depletion on some stocks. Now we are seeing the exhaustion of the market as a whole, ”said Wagner. Read: Stock Market Peak? The ‘easy money‘ has been made, but there is still room for profit On Monday, a closely watched manufacturing report from the Institute of Supply Management for the US disappointed, falling to 60.7% in April from a high. of 38 years of 64.7% in the previous month. Economists polled by Dow Jones and The Wall Street Journal had predicted that the ISM index would rise as much as 65%. In Tuesday’s economic data, the US trade deficit increased 5.6% in March to a record $ 74.4 billion, reflecting a strong appetite for consumer goods as the economy gain speed. The data also showed that US factory orders rose 1.1% in March. On the public health front, the U.S. Food and Drug Administration is expected to authorize Pfizer’s COVID-19 vaccine for ages 12-15 by next week, according to the Associated Press, citing an official. federal and a person familiar with the process, setting shots for many before the start of the next school year. Meanwhile, India ranks second after the United States for cases with 20.3 million and third for deaths with 222,408. What companies are in focus? CVS Health Corp. CVS shares, + 4.14%, rose 4.1%, after the pharmacy chain and the health services company reported first quarter earnings and sales that exceeded expectations, with growth in all segments, and raised their prospects for the entire year. Pfizer Inc. PFE shares, + 0.29%, rose 0.2% after the pharmaceutical giant beat earnings expectations and raised its full-year outlook as revenue expectations for its COVID-19 vaccine rose 73 %. Shares of DuPont Inc. DD rose 0.3% after the specialty materials, chemicals and agricultural products company reported first-quarter earnings and sales that beat expectations, with all of its business segments showing growth and raising its outlook for the whole year. Arconic Inc. ARNC shares rose 16% after the company posted better-than-expected first-quarter earnings and increased guidance, citing higher aluminum prices and strong orders from the aerospace sector. ConocoPhillips COP shares rose 0.3%, after the oil and gas company reported first-quarter earnings that beat expectations and announced the resumption of share buybacks and plans to begin selling its CVE stake from Cenovus Energy Inc. How are other assets doing? In Europe, the Stoxx Europe 600 SXXP fell 1.5%, while the FTSE 100 UKX in London, -0.67% lost 0.7%. The yield on the 10-year Treasury note TMUBMUSD10Y fell 2.6 basis points to 1.580%. The dollar was stronger, rising 0.4% according to the ICE DXY US dollar index. GC00 gold futures fell $ 15.80, or 0.9%, to settle at $ 1,776 an ounce on Comex. US crude CL.1 futures were trading 1.3% higher at $ 65.33 a barrel on the New York Mercantile Exchange. In Asian trade, Hong Kong’s Hang Seng HSI index rose 0.7%. The Shanghai and Tokyo stock exchanges were closed.