NEW YORK (Reuters) – Financial stocks drove U.S. stocks lower on Tuesday to end a three-day rally as investors awaited comments from Federal Reserve Chairman Jerome Powell at the end of the week.
The S&P 500 financial index .SPSY fell 1.4% and the group weighed the most on the benchmark among its major sectors, all of which posted losses.
Prior to Tuesday’s session, US stocks had recouped most of their losses after a massive selloff last Wednesday, triggered by a brief inversion of the yield curve between 2-year and 10-year Treasuries, widely seen as a harbinger of a recession. . Reports of stimulus efforts in China and Germany, as well as the subsequent steepening of the yield curve, helped allay recession fears.
The S&P 500 is now at 4.1% of its July closing high after falling as much as 6.2% below that level.
Investors said they were eagerly awaiting the Fed’s Friday speech by Powell at the Jackson Hole central bankers conference for more clues on the development of monetary policy and interest rates. Clues to the U.S. central bank’s plans can also be found in the minutes of the July Fed policy meeting, which will be released on Wednesday.
âEveryone’s waiting for Jackson Hole,â said Jim Awad, senior managing director of Clearstead Advisors in New York City. “It’s a wait and see attitude until Friday.”
The Fed’s actions gained attention as US economic growth moderated and the US-China trade dispute weighed on business confidence. On Tuesday, President Donald Trump said his administration was considering lowering taxes on wages and capital gains.
Some investors have said such efforts, along with Trump’s calls for the Fed to cut rates, could signal faltering confidence in the U.S. economy.
âThis adds to the perception that there is concern,â said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
The Dow Jones Industrial Average .DJI fell 173.35 points, or 0.66%, to 25,962.44, the S&P 500 .SPX lost 23.14 points, or 0.79%, to 2,900.51 and the Nasdaq Composite .IXIC fell 54.25 points, or 0.68%, to 7,948.56.
Netflix Inc shares NFLX.O 3.4% drop after Walt Disney Co DIS.N announced that its streaming service will launch in Canada and the Netherlands in November.
Facebook Inc FB.O shares fell 1.3% as the company said it was fine-tuning its policies to allow users to see and control the data that other websites and apps share with the social network in order to improve the targeted advertising. A Bloomberg report that Facebook’s digital currency Libra is facing a European Union antitrust investigation has also weighed on stocks.
Home Depot Inc HD.N stocks climbed 4.4% to lead as a percentage of gains on the S&P 500 after the home improvement retailer’s quarterly profits exceeded estimates. Shares of rival Lowe’s Companies Inc LOW.N also rose, up 3.0%.
Medtronic Plc MDT.N stocks rose 2.6%, also among the largest percentage gains in the S&P 500, after the medical device maker raised its adjusted earnings guidance for the full year.
Falling issues outnumbered advancing ones on the NYSE by a ratio of 1.49 to 1; on the Nasdaq, a ratio of 1.71 to 1 favored the declines.
The S&P 500 posted 30 new 52-week highs and five new lows; the Nasdaq Composite recorded 45 new highs and 80 new lows.
Volume on the U.S. exchanges was 5.75 billion shares, compared to 7.56 billion on average for the full session over the past 20 trading days.
Reporting by April Joyner; Additional reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Anil D’Silva, Lisa Shumaker and Dan Grebler