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The leading market averages opened lower on the Tuesday after the Presidents Day holiday.
At first and the Nasdaq Composite (COMP.IND) fell 1.6%the benchmark S&P 500 Index (SP500) declined by 1.3%and the Dow (DJI) slipped 1.4%.
Markets “had a Yesterday started the week quietly, with US markets closed, while in Europe, markets fluctuated between gains and losses during the day, with the STOXX 600 pulling back modestly and 10-year bond yields advancing at close after being down for most of the day,” said Jim Reid of Deutsche Bank.
Rates went up. The 10-year Treasury yield (US10Y) rose 9 basis points to 3.92%. The 2-year yield (US2Y) rose 8 basis points to 4.70%.
“We have highlighted before that the interest rate sensitivity of risky assets this year appears to be well below that of 2022,” ING said. “In other words, despite a loss of momentum in some quarters, more aggressive rate pricing has yet to derail the improvement in risk sentiment.”
“The risks to this state of affairs are twofold. First, we may get to the point where investors judge that interest rates exceed the capacity of weak developed market economies to digest them. Second, tensions Geopolitical issues are rearing their ugly heads once again, with flashpoints in Europe, the Middle East and East Asia.
Manufacturing and services figures arrived. The S&P Global Manufacturing PMI for February rose to 47.8 vs. 47.1 expected, while the Services PMI came in at 50.5 vs. 47.2 expected.
January existing home sales plunged unexpectedly for the 12th straight month. Existing home sales for January came in -0.7 M/M to 4.00 M compared with the consensus figure of 4.10 M.
“Fed Chairman Powell’s relentless ‘go up, go up’ policy has hit housing far more than the broader economy,” said UBS’s Paul Donovan.
Among the gains, Walmart (WMT) fell after the results. He hit both the top and bottom lines, but full-year earnings and compensation forecasts were a concern. Home Depot (HD) fell on sales prospects and margins flat.
