Unsettling forecasts from a pair of high-profile retailers combined with lingering concerns about the Federal Reserve to send stocks sharply lower on Tuesday. As Wall Street got back to work after a three-day holiday weekend, the Dow shed almost 700 points and the S&P 500 finished below the 4,000 mark.
The Nasdaq Composite (COMP.IND) finished -2.5%, the S&P 500 (SP500) ended -2.0% and the Dow (DJI) closed -2.1%.
Looking at the closing numbers, the Dow Jones concluded trading at 33,129.59, a decline of 697.10 points. The S&P 500 fell 81.75 points to end at 3,997.34, while the Nasdaq retreated 294.97 points to finish at 11,492.30.
All 11 S&P sectors finished in the red. This was led by a 3.3% fall in Consumer Discretionary. Communication Services, Financials, Industrials and Info Tech all dropped more than 2% as well.
“Stocks, bonds, most commodities, and cryptos fell after the long holiday weekend as the Fed’s hawkish message is pouring cold water on the hopes of any easing in 2023,” analyst Andrew Hecht told Seeking Alpha. “The recent CPI and PPI reports are fuel for another March rate increase, and the upcoming debt ceiling debate threatens economic stability in the U.S.”
Hecht added: “Meanwhile, President Biden’s surprise visit to Ukraine and Russian President Putin’s speech were reminders of the dangerous geopolitical landscape. Uncertainty is typically toxic for markets across all asset classes.”
Stocks experienced a setback at the start of trading following weak forecasts from retail giants Home Depot (HD) and Walmart (WMT). HD eventually ended 7% lower after it missed on its Q4 revenue figure and delivered a cautious prediction. Meanwhile, WMT finished with a fractional gain, overcoming premarket weakness following its earnings report.
Last week, Wall Street saw choppy trading, as investors worried about Fed policy. Hotter-than-expected inflation reports raised concerns that the central bank will need to keep its hawkish stance longer than previously expected.
Turning to the bond market, rates pushed higher. The 10-year Treasury yield (US10Y) climbed 13 basis points to 3.96%, while the 2-year yield (US2Y) rose 11 basis points at 4.73%.
Looking at another individual stock mover, Sigma Lithium (SGML) jumped 16% after reports that Tesla (TSLA) is weighing a bid for the battery metals miner.