Traders work on the floor of the New York Stock Exchange on March 20, 2024.
Spencer Platt | Getty Images
the Dow Jones Industrial Average It fell for the second day in a row, continuing Wall Street's lackluster start to the quarter, as bond yields rose and traders lowered their expectations that the Federal Reserve will cut interest rates in June.
The 30-stock Dow Jones index fell 425 points, or 1.1%. At its lowest level during the session, the index fell more than 500 points. the Standard & Poor's 500 Decreased 0.9% Nasdaq Composite 1.2% precipitation.
The second quarter for stocks got off to a rocky start, as sticky inflation data due out last week and some strong economic data on Monday pushed yields higher and reduced the odds of the Fed cutting interest rates in June. Stocks came under pressure Tuesday as the 10-year Treasury note rate jumped to its highest level since Nov. 28. Oil prices also rose to their highest levels last seen five months ago.
“What we are seeing is a combination of persistent hot inflation data and profit-taking,” said Greg Bassuk, CEO of AXS Investments. And with the market's “very significant gains in the first quarter…we are due for some correction. But we believe the investor narrative is also bullish for a longer period of time on interest rates.”
The S&P 500 gained 10% in the first quarter, its best start since 2019, as investors bet that inflation will fall enough for the Federal Reserve to start cutting interest rates while the economy continues to grow. The Nasdaq index gained 9% in the first quarter on the back of the rise in stocks related to artificial intelligence, such as Nvidia.
Sarat Sethi, managing partner at Douglas C. Lane & Associates, remained unfazed by the sell-off, calling it a “natural digestion” after the stock rose rapidly and quickly. Sethi said the market remains strong and noted pockets of opportunity in sectors outside technology, such as energy, which was one of two sectors in the green on Tuesday.
Tuesday's market losses come after the core PCE price index for February released on Friday showed a 2.8% annual increase, even with December and January's 2.9% rate, and still a way to go away from the Fed's 2% inflation target. %. A gauge of manufacturing released by the Institute for Supply Management on Monday showed an expansion for the first time since September 2022.
The odds of a June rate cut based on Fed futures trading have now fallen to about 58.8%, compared to about 70% a week ago. The question now is whether the momentum to start 2024 can continue if the Fed holds steady on interest rates.
Tesla Shares fell about 5% after posting disappointing first-quarter deliveries. Related technology giants Nvidia, the alphabet And MicrosoftShares of some of this year's big winners are down nearly 1%.
Health insurers declined after the Centers for Medicare & Medicaid Services finished announcing the 2025 rate for Medicare Advantage and prescription drug coverage. In 2025, government payments toward these plans are expected to rise by 3.7% year over year, unchanged from the previously proposed rate. Humana He lost more than 14%, while UnitedHealth It fell by 7.5% CVS Health fell about 8%
