Stocks trade mixed with tech stocks under pressure
US stocks turned mixed intraday on Tuesday, slashing earlier gains as tech stocks lost strength.
The Dow Jones added more than 100 points, or 0.3%, but came out of session highs when the index rose more than 300 points. The S&P 500 hugged the flat line, while the Nasdaq turned slightly negative. Yields on T-bills rose across the curve and the yield on benchmark 10-year T-bills exceeded 1.62%. Both Brent and U.S. crude oil prices rose after OPEC + suggested oil inventories would decline further as the post-pandemic recovery accelerates later this year.
In recent weeks, equity investors have at least temporarily allayed fears about rapidly rising prices for consumer and producer goods during the economic recovery, especially as Federal Reserve officials have reassured players. market that they did not yet see inflationary pressures that justify a change in monetary policy in the short term. Nonetheless, inflation hedges like precious metals were among the best performers in May, signaling an undercurrent of nervousness over rising prices. Of 38 non-monetary assets tracked by Deutsche Bank, silver was the best performing asset with an 8.1% gain, followed by gold with a 7.9% increase, analysts wrote. the bank in a note Tuesday.
Later this week, investors are set to receive a number of new US labor market economic data reports, including the May Jobs Report. These will further elucidate the strength of the economic recovery, showing whether rehiring has picked up enough to help alleviate labor shortages cited by a number of companies during the recovery. It will also indicate whether the economy is approaching the Federal Reserve’s target of achieving maximum employment before withdrawing from monetary policy support.
But aside from monetary policy, some strategists have said it will be up to investors to consider the implications of the new fiscal policies, especially with the prospects of a stronger economy encouraging the government to raise taxes for the new plans. . At the end of last week, President Joe Biden unveiled a $ 6 trillion budget proposal for fiscal year 2022, which would include a number of proposals to improve infrastructure, education resources and the healthcare system. health system and which would be financed in part by higher taxes.
“I think we are learning more and more about the president’s budget and it is chock-full of new taxes, not just for businesses but for individuals. Now, in a perverse way, this fiscal drag may actually help the government. inflation by silencing it. But what does that tell me as an investor is that we have had all this stimulus, there is going to be a delayed effect in the second half of this year ”, Nancy Tengler, chief investment officer of Laffer Tengler Investments, told Yahoo Finance.
“With the tax hike and possibly the interest rate hike, we are going to see a slowdown in the economy which would then lead to a return to the growth rate of value trade,” she added. “So we’ve positioned ourselves for that, adding high-quality growth names on sale over the past six months.”
11:30 a.m.ET: Nasdaq drops as tech stocks drop
Stocks reversed course on Tuesday to trade mostly lower, with heavily weighted tech stocks trailing on both the S&P 500 and the Nasdaq. The S&P 500 hovered near the flat line, while the Nasdaq fell around 0.2%.
Cyclical energy, materials and financials sectors outperformed the S&P 500, while health care, utilities and information technology lagged. Chevron, Goldman Sachs and American Express outperformed the Dow, while Johnson & Johnson and Salesforce lagged behind.
10:26 a.m. ET: Construction spending moderated in April after the March jump
Construction spending rose just 0.2% in April from March, slowing more than expected following a recovery in early spring, the Commerce Department’s monthly report said on Tuesday.
Construction spending rose 1.0% in March, with much of the advance attributable to a rebound from bad weather in February. Residential construction in April was another area of outperformance, rising 1%. Non-residential construction fell 0.5%, while government building projects fell 0.6%.
10:20 a.m. ET: Manufacturing sector grew more than expected in May
Manufacturing activity in the United States picked up more than expected in May, as demand surged across the economy as the economy reopened.
The Institute for Supply Management’s May Purchasing Managers Index rose to 61.2 from 60.7 in April, rising at the fastest pace since March. It also topped estimates for an impression of 61.0, according to Bloomberg data. Much of the increase came from a jump in new orders, with the next sub-index rising to 67.0 from 64.3 in April.
Readings above the neutral level of 50 indicate expansion in a sector.
9:30 a.m. ET Stocks open higher
Here’s where the markets were trading after the opening bell:
S&P 500 (^ GSPC): +29.36 points (+ 0.7%) to 4 233.47
Dow (^ DJI): +311.68 points (+ 0.9%) at 34,841.13
Nasdaq (^ IXIC): +73.63 points (+ 0.54%) to 13,825.46
Gross (CL = F): + $ 2.17 (+ 3.27%) to $ 68.49 per barrel
Gold (GC = F): + $ 8.20 (+ 0.43%) to $ 1,913.50 per ounce
10-year cash flow (^ TNX): + 2.9bp for a yield of 1.622%
7:38 a.m. ET Tuesday: Advance on Equity Futures
Here’s where the markets were trading on Tuesday morning:
S&P 500 Futures Contracts (ES = F): 4,226.00, +23.5 points (+ 0.56%)
Dow Futures (YM = F): 34,751.00, +238.00 points (+ 0.69%)
Nasdaq Futures (NQ = F): 13,748.75, +62.25 points (+ 0.45%)
Gross (CL = F): + $ 1.82 (+ 2.74%) to $ 68.14 per barrel
Gold (GC = F): + $ 4.60 (+ 0.24%) to $ 1909.90 per ounce
10-year cash flow (^ TNX): +2.3 bps for a yield of 1.616%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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