Dmitry Vinogradov
U.S. stocks on Tuesday quickly gave up their marginal gains into the final hour of trading to eventually end mixed.
Market participants earlier digested economic data that showed some moderation in home prices, and volatility can be expected in this holiday-shortened week as tweaks are made to portfolios ahead of the end of the quarter.
The tech-heavy Nasdaq Composite (COMP:IND) slipped 0.42% to close at 16,315.70 points, while the benchmark S&P 500 (SP500) retreated 0.28% to settle at 5,203.62 points. The blue-chip Dow (DJI) fell marginally by 0.08% to conclude at 39,282.59 points.
Of the 11 S&P sectors, eight ended in the red.
The S&P (SP500) is approaching an advance of nearly 10% for Q1 2024, driven by interest rate cut expectations and a relentless rally in technology stocks. Wall Street’s benchmark index has achieved several milestones in the quarter, including surging past 5,000 points for the first time ever on February 8, the 5,100 mark on February 23 and the 5,200 level last Wednesday.
The Federal Reserve last week stuck to an outlook of three expected interest rate cuts in 2024, while signaling higher growth. Moreover, chair Jerome Powell expressed optimism that inflation was largely trending in the right direction. The Fed’s actions and Powell’s comments led to a surge in soft landing hopes, boosting sentiment and sending the S&P 500 (SP500) to its best weekly advance of the year on Friday.
“The stock market is resting near record highs, while bonds are steady as the market consensus continues to favor Fed rate cuts later this year. With June gold around $2,200, oil comfortably over $80, and copper hovering around $4, the leading commodities are mostly bullish,” Andrew Hecht, investing group leader of Hecht Commodity Report, told Seeking Alpha.
“Cocoa futures rose to a record high of over $10,000 per ton due to supply fears caused by weather and crop issues in West Africa. Chocoholics will pay a lot more for their daily fix as the leading chocolate companies will pass along the cost of the frenzied bull market. Cocoa’s rise is a warning for other agricultural commodities that feed and increasingly power the world,” Hecht added.
On Tuesday, the economic calendar had some encouraging data on the housing market in the form of the Federal Housing Finance Agency’s (FHFA) monthly report. According to the FHFA, U.S. house prices unexpectedly ticked down 0.1% M/M in January, compared to a consensus for a rise of 0.2%. At the same time, the S&P CoreLogic Case-Shiller U.S. national and 20-city composite price indexes showed a continued decrease of 0.1% in January.
The FHFA and S&P readings were positive as high housing prices have been a key driver of inflation.
Additionally, the Conference Board said that consumers’ assessment of the present situation improved in March, but also noted that they became more pessimistic about the future. Finally, the Richmond Fed’s monthly survey showed a slowing down in manufacturing activity in March.
Treasury yields were towards the downside after a record $67B 5-year note auction traded through by 1 basis point. The longer-end 30-year yield (US30Y) was down 1 basis point to 4.40%, while the 10-year yield (US10Y) was also down 1 basis point to 4.23%. The shorter-end more rate-sensitive 2-year yield (US2Y) was flat at 4.59%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
Turning to active stocks, UPS (UPS) ended as the top percentage loser on the S&P 500 (SP500), after the parcel delivery giant set financial targets for 2026 ahead of an investor conference.
