U.S. stocks hit intraday lows on Tuesday as two weak Treasury auctions triggered bond selling, pressuring stock prices.
Investors are coming back from a three-day weekend for the Memorial Day holiday. Wall Street They have won five weeks in a row, but recently Stuck Uncertainty surrounding interest rate cuts has pushed it close to its all-time high.
Tuesday also marks the start of the “T+1” rule, a new cycle that requires market participants to settle stocks in one day instead of two. The change is expected to have little impact on trading decisions.
The benchmark S&P 500 (SP500) clearly fell into negative territory. Down 0.38% In afternoon trading, the Dow Jones Industrial Average rose to 5,284.72 points.DJI) was added to the loss, and now Down 0.85% The total is now 38,736.19 points.
The Nasdaq Composite Index (COMP:IND) significantly curtailed its progress last year. Slight increase of 0.07% Last week, semiconductor giant Nvidia (NVDA) announced another strong quarterly earnings report, sending its stock price up for a third straight day, helping it surpass the 17,000 mark for the first time.
Eight of the S&P’s 11 sectors were in the red.
U.S. Treasury yields rose sharply as traders sold bonds following weak auctions for both $69 billion in two-year notes and $70 billion in five-year notes. Yields on the longer-dated 30-year (US30Y) and 10-year (US10Y) notes both rose 8 basis points to 4.66% and 4.55%, respectively. The yield on the shorter-dated, interest-sensitive two-year (US2Y) note rose 4 basis points to 4.98%.
“The poor results of the two-year and five-year note auctions suggest investors are worried the Fed may not be done fighting inflation yet,” Althea Spinozzi, senior fixed income strategist at Saxo Bank, said on X (formerly Twitter).
See live data on how Treasury yields are trending across the curve on the Seeking Alpha Bonds page.
Wall Street was mixed throughout the morning, with the benchmark S&P 500 index little changed from flat. Hawkish comments from Minneapolis Fed President Neel Kashkari, known as one of the more hawkish Fed policymakers, came against the backdrop of favorable economic data.
“I’ve been asked multiple times whether we’re backing away from a potential rate hike, but I don’t think anybody, including myself, has formally backed away,” Kashkari said at a Barclays CEPR event in London. “We’re not ruling out higher rates going forward,” he added.
The comments countered data from the Conference Board that showed consumer confidence rose in May after three straight months of declines. But while the reading was better than expected, it was still the second-lowest in a year and a half. Moreover, a closer look at the report showed that 12-month average inflation expectations rose slightly in May.
“The ability to hold seemingly contradictory views about something in one’s mind is an anomaly, or perhaps an advantage of human nature, but this ability is rarely demonstrated in survey data. In today’s report, several specific survey questions reveal that consumers are optimistic about the stock market while at the same time increasing the percentage of those who believe a recession is likely,” said Tim Quinlan of Wells Fargo.
Attention is now shifting to Friday’s release of the core personal consumption expenditures price index, the Fed’s go-to inflation gauge.
On the economic calendar Tuesday, the S&P CoreLogic Case-Shiller Index surged to a record high in March with all major metro markets reporting month-over-month price gains, while home prices rose 0.1% month-over-month in March, according to FHFA data.
Among active stocks, shares of US Cellular (USM), one of the last major regional wireless carriers in the U.S., rose after the company announced it would sell nearly all of its wireless business to T-Mobile US (TMUS) for about $4.4 billion.
