Spencer Platt
U.S. stocks on Tuesday were mixed and moves were small, with the focus largely on the fixed-income market amid a flurry of Treasury auctions. Market participants also appear to be in wait-and-watch mode ahead of key inflation data later this week.
Approaching mid-day, the tech-heavy Nasdaq Composite (COMP.IND) had added 0.12% to 15,995.13 points, while the benchmark S&P 500 (SP500) fluctuated around the unchanged mark, last down 0.08% to 5,065.71 points. The blue-chip Dow (DJI) slipped 0.46% to 38,889.34 points.
Of the 11 S&P sectors, seven were in the red, led by Energy. Utilities topped the gainers.
Markets ended marginally lower on Monday, as Wall Street took a breather following another record-breaking week that saw the S&P (SP500) cross the historic 5,100 points level for the first time ever on Friday. The gains were fueled largely by yet another blowout quarterly report and guidance from chip giant Nvidia (NVDA) that sent technology and artificial intelligence-related stocks soaring.
“Investor optimism is high and positioning is elevated, as a goldilocks outcome (or better) has become consensus. However, inflation risks are skewed to the upside given given loose financial conditions, tight labor markets and easy fiscal policy, which could keep the (Federal Reserve) higher for longer,” JPMorgan’s Marko Kolanovic cautioned on Monday.
“Additionally, the narrative could turn from goldilocks toward 1970s-style stagflation given geopolitical headwinds to global trade that could be exacerbated by the Nov U.S. election,” Kolanovic added.
Treasury yields were mixed on Tuesday. The longer-end 30-year yield (US30Y) was little changed at 4.41%, while the 10-year yield (US10Y) was down 1 basis point to 4.29%. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 5 basis points to 4.69%.
Yields had risen in the previous session as bonds had sold-off following two weak record-sized auctions. The U.S. Treasury yesterday had sold $63B of 2-year notes and $64B of five-year notes, the biggest amount for those tenors ever. However, both auctions had tailed, pointing to weak demand for securities in what has been a recent trend. A $16B 20-year bond auction last week had tailed by its largest margin on record. Traders will be keeping an eye on the $42B 7-year note auction later this afternoon.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Tuesday’s economic calendar weighed on the mood somewhat. Data showed record high prices for houses along with an unexpected dip in consumer confidence in February, reflecting continued uncertainty about the U.S. economy. Additionally, the Richmond Fed’s gauge of manufacturing activity came in flat for February.
Cryptocurrencies garnered significant attention on Tuesday, with bitcoin (BTC-USD) logging a big gain. The world’s largest crypto hit a two-year high and was last up nearly 7% at around $56.9K. The rally was driven by continued gains from MicroStrategy’s (MSFT) announcement on Monday of a recent $155M purchase of bitcoin (BTC-USD), as well as bullish momentum ahead of a highly-anticipated halving event in April.
Turning to active stocks, Viking Therapeutics (VKTX) stock nearly doubled in value after the drugmaker said its investigational weight-loss therapy met the primary and all secondary goals in a mid-stage study. Weight-loss drug leaders Novo Nordisk (NVO) and Eli Lilly (LLY) declined in reaction to Viking’s (VKTX) results.
Among earnings-related moves, Norwegian Cruise Line Holdings (NCLH) was the top percentage gainer on the S&P 500 (SP500) after reporting its first profitable year since 2019 and guiding to a surprise profit in the current quarter. The results and forecast lifted peers Carnival Corp (CCL) and Royal Caribbean Cruises (RCL).
