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US close: Markets lower on broad losses as Treasury yields surge
(WebFG News) - Tuesday finished well into the red on Wall Street, after an early rise in government bond yields, and a sell-off of shares of Google parent Alphabet following its latest quarterly update.
The Dow Jones Industrial Average ended the day down 1.74% at 24,024.13, the S&P 500 was off 1.42% at 2,632.48, and the Nasdaq 100 lost 2.1% to settle at 6,509.05.
Stocks opened mixed earlier in the day, having closed flat to slightly lower on Monday as the 10-year Treasury note traded at four-year highs, just shy of its end-2013 highs of 3.0%.
On Tuesday, yields finally reached that psychological level, with upbeat readings on US house prices and new home sales apparently reinforcing expectations that the Federal Reserve will hike interest rates a total of four times this year rather than three.
According to Treasury, the closing constant maturity yield on the benchmark 10-year note was 3.00% precisely.
Hussein Sayed, chief market strategist at FXTM, said US 10-year yields would be monitored closely this week as they were less than 0.3 basis points from breaking the 3% benchmark on Monday.
"The 3% by itself is just a psychological level and not a significant threat, but if a break above leads to further selling in Treasury bonds, that's going to be a serious warning signal for equity bulls," he said.
"With a current world running on AI and algorithms, a selloff may look ugly."
On the corporate front, Alphabet shares tumbled 4.77% after it reported an 84% jump in first-quarter profit after the close on Monday, to $9.4bn, compared to estimates of $6.54bn.
The Google owner put that down to strong advertising sales.
"Growth remains robust and extraordinarily consistent," noted analysts at RBC Capital Markets.
However, CMC Markets analyst Michael Hewson said there appeared to be some concern about the growth in capital spending, with $7.3bn in the first quarter alone - well in excess of the same period a year ago.
"However, it is an age-old adage that if you don't invest in your infrastructure in the short term you pay the penalty eventually in the long term.
"Investors will tolerate higher capex if it helps keep the business sustainable in the face of higher traffic and increased resilience which seems the case here."
Construction equipment maker Caterpillar reversed earlier gains to end up plunging 6.2% by the end of the day.
Earlier in the session, reported first quarter profits and sales that dwarfed analysts' estimates, and proceeded to boost its full-year outlook for earnings per share to between $10.25 and $11.25.
Previously, the company had guided towards earnings in the range of between $8.25 and $9.25 per share.
Pharmaceutical group Eli Lilly lost 0.19% after it posted a net income of $1.22bn or $1.16 a share for the first quarter, compared with a loss of $110.8m or 10 cents per share the year before.
United Technologies was also reversed early gains, finishing down 1.1% after it reported stronger than expected first-quarter results allowing the industrial conglomerate to up its full-year forecasts on sales and earnings.
The Coca-Cola Company lost 2.07% despite beating analyst forecasts on earnings per share.
Verizon Communications managed to keep its head above water, finished up 2.08% thanks to strong momentum seen in its first trading quarter.
3M dropped 6.83%, clawing back a fraction of its early losses, after the company tempered its sales growth outlook for the year despite a solid start to the first quarter.
On the data front, US house price growth unexpectedly accelerated in February, according to the S&P/Case-Shiller National Home Price Index.
The 20-city index was 6.8% higher year-over-year, up from 6.4% in January and beating expectations for a slowdown to 6.3% growth.
Meanwhile, the FHFA's national Home Price index covering all nine US census divisions was 72% higher on the year in February, and on the month it rose by 0.6%, beating consensus forecasts for 0.5% growth.
In a separate report, new-home sales ran at a 694,000, beating expectations for 625,000, on a seasonally-adjusted annual basis in March, according to the Commerce Department, as sales of newly constructed homes surged, and earlier estimates were revised up,
The March rate was 4% above upwardly revised February figures and the highest pace since November.
Lastly, the Richmond Fed manufacturing index for April came in much weaker than expected at -3 versus an expected 16, as the index was weighed down by a contraction in shipments and new orders, mimicking the results of the Philly Fed's own factory survey earlier in the month.
Dow Jones - Risers
Verizon Communications Inc. (VZ) $49.67 3.70%
Merck & Co. Inc. (MRK) $60.09 2.14%
Nike Inc. (NKE) $66.97 1.33%
Pfizer Inc. (PFE) $37.06 1.17%
General Electric Co. (GE) $14.68 0.96%
Intel Corp. (INTC) $51.45 0.68%
International Business Machines Corp. (IBM) $145.56 0.46%
Chevron Corp. (CVX) $122.54 0.19%
Unitedhealth Group Inc. (UNH) $234.22 -0.36%
American Express Co. (AXP) $100.42 -0.37%
Dow Jones - Fallers
3M Co. (MMM) $201.13 -7.63%
Caterpillar Inc. (CAT) $144.27 -6.31%
Dowdupont Inc. (DWDP) $63.18 -4.33%
Goldman Sachs Group Inc. (GS) $242.50 -3.76%
Boeing Co. (BA) $328.87 -2.90%
Travelers Company Inc. (TRV) $132.88 -2.89%
Visa Inc. (V) $121.27 -2.36%
Microsoft Corp. (MSFT) $93.12 -2.34%
Procter & Gamble Co. (PG) $72.50 -1.76%
Coca-Cola Co. (KO) $43.07 -1.53%
S&P 500 - Risers
Hanesbrands Inc. (HBI) $18.15 5.46%
Under Armour Inc. Class A (UAA) $16.96 5.34%
Kroger Co. (KR) $25.38 5.22%
Whirlpool Corp. (WHR) $155.96 4.41%
Fifth Third Bancorp (FITB) $33.25 4.13%
GameStop Corp. (GME) $13.40 4.04%
PulteGroup Inc. (PHM) $29.65 3.89%
Verizon Communications Inc. (VZ) $49.67 3.70%
Gap Inc. (GPS) $29.19 2.64%
BB&T Corp. (BBT) $54.01 2.47%
S&P 500 - Fallers
Freeport-McMoRan Inc (FCX) $16.08 -16.94%
Masco Corp. (MAS) $36.18 -7.80%
Ryder System Inc. (R) $68.39 -7.64%
3M Co. (MMM) $201.13 -7.63%
Parker-Hannifin Corp. (PH) $163.35 -7.39%
Waters Corp. (WAT) $193.18 -7.22%
PACCAR Inc. (PCAR) $64.92 -6.47%
Caterpillar Inc. (CAT) $144.27 -6.31%
Rockwell Automation Inc. (ROK) $162.01 -6.26%
Deere & Co. (DE) $138.09 -6.04%
Nasdaq 100 - Risers
Cadence Design Systems Inc. (CDNS) $40.09 9.12%
Shire Plc Ads (SHPG) $163.93 2.41%
Synopsys Inc. (SNPS) $84.04 1.74%
Asml Holdings N.V. (ASML) $194.05 1.43%
Biogen Inc (BIIB) $262.15 1.10%
Liberty Global plc Series A (LBTYA) $33.25 1.09%
O'Reilly Automotive Inc. (ORLY) $224.63 0.92%
Liberty Global plc Series C (LBTYK) $32.05 0.79%
Intel Corp. (INTC) $51.45 0.68%
Walgreens Boots Alliance, Inc. (WBA) $65.00 0.62%
Nasdaq 100 - Fallers
Incyte Corp. (INCY) $62.35 -8.50%
PACCAR Inc. (PCAR) $64.92 -6.47%
Qurate Retail Group Inc QVC Group (QRTEA) $23.64 -6.26%
Alphabet Inc. Class A (GOOGL) $1,022.64 -4.77%
Alphabet Inc. Class C (GOOG) $1,019.98 -4.45%
Autodesk Inc. (ADSK) $123.68 -4.26%
Micron Technology Inc. (MU) $47.11 -3.90%
Amazon.Com Inc. (AMZN) $1,460.09 -3.81%
Paypal Holdings Inc (PYPL) $75.28 -3.75%
Facebook Inc. (FB) $159.69 -3.71%