S&P 500, Nasdaq fall, interest rates rise after hawkish Fedspeak

U.S. stocks ended broadly lower on Wednesday through the start of March, as key manufacturing data provided mixed results and two Federal Reserve officials suggested a more aggressive rate hike campaign in the coming months.

The S&P 500 (^GSPC) fell 0.5%, while the Dow Jones Industrial Average (^DJI) was flat. Contracts on the technology-heavy Nasdaq Composite (^IXIC) fell by 0.6%.

The yield on the benchmark 10-year U.S. Treasury note moved higher, briefly reaching 4% on Wednesday. Crude oil traded higher, with the US benchmark WTI up to $77.73 a barrel.

On the economic data side, US manufacturing firms signaled a gloomy outlook for the sector, according to the latest PMI data from S&P Global. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index was revised down to 47.3 in February, up from 46.9 in January. The reading indicates “a solid deterioration in the health of the goods-producing sector, despite the slowdown softening to the slowest in three months.”

Separately, economic activity in manufacturing slowed in February for the fourth straight month after a 28-month period of growth, according to the Institute for Supply Management report on business. The data offered a mixed bag. Employment in industry fell to 49.10 in February from 50.60 in January. Order intake rose to 47.0 compared to January’s figure of 42.5. Prices paid jumped to 51.3 from January’s reading of 44.5.

Stocks fell on Tuesday, rounding off the final day of a volatile February on Wall Street. According to JP Morgan’s trading desk, February’s monthly rebalance led to some weakness in stocks and strength in bonds on Tuesday afternoon.

With February behind us, the S&P 500 is still up more than 3% this year, according to data from Bespoke Investment Group. Mega-caps have been a massive driver of index movements. That said, 20 of the largest stocks in the S&P 500 have accounted for most of the index’s gains.

Now, as the calendar turns, March historically sees the S&P 500’s gains in the second half of the month, Bespoke Investment Group noted.

The trajectory of the Federal Reserve’s rate hikes remains a focus for investors. Speaking on Wednesday, two Federal Reserve officials hinted that aggressive rate hikes are the way forward to ease inflation.

They followed Chicago Fed President Austan Goolsbee, who said Tuesday that it would be a “danger and a mistake for policymakers to rely too heavily on market reactions” and stressed the importance of “supplementing this traditional data with on-the-ground observations from the real economy.” “

However, Goolsbee, who will be a voter at this year’s policy-setting Federal Open Market Committee meeting, did not comment on monetary policy.

Since last year, the Fed has raised interest rates sharply in an attempt to cool inflation. But inflation remains sticky. Politicians will issue new estimates after the central bank’s meeting on 21-22. March.

Austan Goolsbee, professor at the University of Chicago, speaks at the Obama Foundation

Austin Goolsbee. REUTERS/Brendan McDermid

On the housing front, mortgage rates continue to move upwards, pushing buyers to the sidelines as the spring housing market gets underway. Both purchase and refinance applications fell last week, according to the Mortgage Bankers Association’s seasonally adjusted index. The volume of purchase applications hit a 28-year low, down 44% from a year ago.

Here are some of the tickers trending on Yahoo Finance today:

  • Eli Lilly and Company (LLY): The pharmaceutical manufacturer announced on Wednesday morning that it expects to limit the cost of ownership the insulin at $35 a month. The plan comes as a promise to provide critical relief to some people with diabetes, who at times face higher medical costs.

  • Kohl’s (KSS): Shares of the retail giant fell nearly 2% on Wednesday after the company posted a surprise fourth-quarter loss and sales fell as consumer habits shift away from discretionary spending.

  • Wendy’s (WHEN): The fast food chain announced in its quarterly results its plans to target sales growth through 2025 as it streamlines costs.

  • Rivian (TORN): The electric truck maker’s guidance for fiscal 2023 deliveries was 20% below estimates as the EV maker struggles to scale up truck, van and SUV production.

  • Nine (NINE): Another electric car manufacturer gave weak earnings reports. The Chinese premium EV startup reported a much worse-than-expected fourth-quarter loss as margins took a hit due in part to “losses on purchase commitments.”

  • Novavax (NVAX): The vaccine maker warned about its ability to remain in business through next year. This comes as the company has struggled to develop and enter the covid-19 vaccine market.

  • Alibaba (BABA): The stock climbed in the wake of the group’s quarterly results, driven by the 4% overnight rise in the Hang Seng index.

  • Dollar Tree (DLTR): The discount retailer’s stock rose almost 2% after the company issued weaker guidance for the current financial year.

  • Tesla (TSLA): The EV maker is set to kick off its first Investor Day event on Wednesday from its gigafactory in Austin, Texas. CEO Elon Musk is expected to announce new Tesla products aimed at reducing reliance on fossil fuels and leading to a “fully sustainable energy future.”

  • HP (HPQ): The PC and printing giant’s shares faltered after the company posted mixed results amid a soft demand environment for personal computers. Sales in the accounting quarter fell by 18 per cent from the previous year. Printer sales fell 5% from a year ago.

  • Reata Pharmaceuticals (RETA): The stock surged nearly 200% on Wednesday after the US Food and Drug Administration on Tuesday approved the company’s treatment for Friedreich’s ataxia, a rare inherited disease that causes damage to the nervous system.

  • Lowes (LOW): The home improvement company reported weaker fiscal fourth-quarter sales and gave a conservative outlook going forward, with comparable sales expected to be flat to down 2% compared to a year earlier. The stock fell almost 6 percent on Wednesday.

Other losers Wednesday after the clock included Salesforce ( CRM ), Snowflake ( SNOW ) and Okta ( OKTA ).

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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