U.S. stock indexes were lower ahead of a wave of earnings reports from major technology and blue-chip firms, as investors contended with fears about slowing growth.
The S&P 500 shed 1.7% in Tuesday morning trading. The Dow Jones Industrial Average declined 1.2%, while the technology-heavy Nasdaq Composite lost 2.7%. All but one of the S&P 100’s 11 sectors were in the red, with consumer discretionary and tech stocks among the leading decliners.
United Parcel Service fell more than 3%. The company said quarterly revenue rose more than 6%, though it shipped fewer packages than it did in the year-ago quarter. 3M, which reported better-than-expected first-quarter sales, fell 3%.
Fears about a resurgence of Covid-19 cases in China, and strict lockdowns imposed to fight the outbreak there, have heightened investors’ concerns about the global economy and prompted choppy trading in recent sessions. Soaring inflation is weighing on companies and consumers, while the Federal Reserve’s indications that it will quickly tighten monetary policy threatens to drag on growth.
“We had a beautiful scenario over the last 18 months: Growth was accelerating and bond yields were falling—the perfect combination for risk assets,” said Hani Redha, a portfolio manager at PineBridge Investments. “Now we have the complete opposite.”
The yield on the 10-Year U.S. Treasury note declined to 2.751% from 2.825% on Monday. The yield on the benchmark note remains close to its highest level since 2018 as investors have sold bonds in anticipation of higher interest rates. Bond yields rise as prices fall.
Assets considered havens in times of trouble, such as Treasury bonds, are being pressured by inflation and expectations for tighter central-bank policy along with stocks, complicating matters for investors seeking shelter during recent volatility. Gold, another haven, rose 0.4% on Tuesday, but prices remain close to their lowest level since February.
“Inflation really is enemy number one for financial markets. It is painful for risk assets and painful for your safety assets,” Mr. Redha said. “There are very few places to hide.”
Brent crude futures rose 0.7% to $102.86 a barrel. The international oil benchmark fell below the $100 a barrel level Monday before rebounding. U.S. benchmark oil prices, known as West Texas Intermediate, rose 0.7% to $99.24 a barrel Tuesday.
In economic news, U.S. consumer confidence fell slightly in April, the Conference Board said on Tuesday. Orders for durable goods—consumer products designed to last for more than three years—rebounded in March following a weak February.
The S&P CoreLogic Case-Shiller National Home Price Index, a measure of average home prices in major U.S. metropolitan areas, rose 19.8% in the year that ended in February, up from a 19.1% annual rate the prior month. Higher prices and rising mortgage rates are expected to weigh on home sales this year. Sales of new homes fell 12.6% in March from a year ago, the Commerce Department said Tuesday.
In mainland China, the Shanghai Composite Index fell 1.4%, lower for a second consecutive day, as investors continued to worry about the threat of new Covid-19 lockdowns. The People’s Bank of China vowed to step up support for the economy Tuesday in an attempt to calm the jitters, but the move only had a temporary effect on local markets.
“I don’t see any catalyst for price appreciation until we get some tangible, meaningful moves on the policy front,” said John Woods, Asia Pacific chief investment officer at Credit Suisse, referring to Chinese stocks.
Elsewhere in Asia, Tokyo’s Nikkei 225 index rose 0.4%, while South Korea’s Kospi edged up 0.4%. Hong Kong’s Hang Seng Index rose 0.3%.
—Rebecca Feng contributed to this article.
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