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U.S. stocks traded lower Tuesday as investors took a cautious stance ahead of closely watched speeches and data later in the week on interest rates and the economy.
How stocks are trading
-
The S&P 500
SPX
dropped 43 points, or 0.8%, to 5,086 -
The Dow Jones Industrial Average
DJIA
declined 239 points, or 0.6%, to 38,750 - The Nasdaq Composite fell 277 points, or 1.7%, to 15,930
Major indexes were on track for back-to-back losses after the S&P 500 and Nasdaq pulled back Monday from record finishes scored at the end of last week.
What’s driving markets
Tuesday’s trading session is taking a cautious tone. So far, the year has been good for markets as investors navigate moderating inflation, economic growth and the next move on interest rates.
But until investors hear the fresh round of data and weighty speeches on these topics later this week, it’s a risk-off mood. At least for equities. Bitcoin
BTCUSD,
notched a new record Tuesday morning, briefly moving past $69,000.
“After posting 16 weekly gains out of 18 for the first time since 1971, yesterday saw the S&P 500 get the week off to a subdued start as we await several key events later this week, including appearances from Chair Powell [at Congress on Wednesday and Thursday], the U.S. jobs report [Friday], and the ECB decision [Thursday],” said Jim Reid, strategist at Deutsche Bank.
Kim Forrest, founder and chief investment officer at Bokeh Capital Partners, said this week is reminiscent of last week’s start. At that time, the big worry was what the Fed-preferred inflation gauge would show at the end of the week. In-line numbers prompted relief and another leg higher for markets.
Now it’s a new week “and now we’re back to freaking out,” Forrest said in a phone interview. This time, Federal Reserve Chair Jerome Powell’s two-day testimony and the February jobs report are the focal points.
Powell’s words will be parsed and dissected by everyone to show any array of inferences on where interest rates go from here, Forrest said. Before Powell, Fed Vice Chair for Supervision Michael Barr is scheduled to talk Tuesday afternoon.
So the main event for Forrest is Friday’s jobs numbers, where it may be easier to glean market implications. “The economy seems to be perking right along,” Forrest said. She’s hoping for a “steady Eddie” showing an incremental addition of new jobs and softening wage inflation.
There’s Tuesday economic data before the Friday jobs report. The service-sector PMI fell to 52.6% in February from 53.4% in January, marking a bigger-than-expected drop. Still, a number over 50% signals economic expansion, where the index has been since December 2022.
Factory orders also fell 3.6% in January, dragged by fewer contracts for passenger airplanes from Boeing.
On Tuesday, there’s also pressure coming from a dip in Apple Inc.’s
AAPL,
shares, weighing on the Dow, Nasdaq and S&P 500. The stock is sagging after a report that iPhone sales in China fell 24% during the first six weeks of the year.
Companies in focus
-
Target Corp.
TGT,
+11.51%
shares were more than 11% higher. That’s after fourth-quarter earnings from the retailer with expectation-exceeding metrics like lower markdown rates and lower inventory-related costs. -
MicroStrategy Inc.
MSTR,
-17.05%
shares fell more than 13%. The business analytics software company has built up its bitcoin exposure as its primary treasury asset and reaffirmed that approach in a Monday plan to offer convertible debt. The company’s stock recently ran to a 24-year high.
