The Dow Jones Industrial Average took a hit on Tuesday, extending its poor start to the second quarter as health care stocks and rising Treasury yields weighed on the market. By 4:00 PM ET, the Dow was down 396 points, the S&P 500 fell 0.7%, and the Nasdaq dropped 1%.
Treasury yields continued to climb as Federal Reserve officials signaled a need to keep rates higher for longer. San Francisco Fed President Mary Daly and Cleveland Fed President Loretta Mester both emphasized the importance of maintaining current rate levels, with Daly stating that there was no urgency to cut rates as inflation remains above the central bank’s target.
The CME’s FedWatch tool now shows a 62% probability of a Fed rate cut in June, down from 70% a week ago. This comes as the latest job data showed a slight increase in job openings in February, with the focus now shifting to the March employment report due on Friday.
Health care stocks, including Humana Inc, UnitedHealth Group Incorporated, and CVS Health Corp, suffered losses after the Center for Medicare and Medicaid Services announced that private Medicare Advantage rates would increase by an average of 3.7% in 2024, putting pressure on insurers’ margins.
Tesla led a slump in electric vehicle stocks after reporting disappointing first-quarter delivery numbers, falling short of expectations. Competitor Rivian Automotive also trailed analyst consensus for production numbers, leading to a decline in their stock prices as well.
In other news, Schlumberger NV announced a deal to acquire oilfield equipment maker ChampionX Corp for $7.7 billion in an all-stock deal, boosting shares of the latter by 10%. However, PVH stock slumped over 22% after the fashion retailer provided softer guidance for full-year sales, citing a challenging macroeconomic environment.
Overall, the market faced headwinds from various sectors, with investors closely monitoring Fed signals, job data, and company performance to navigate the uncertain economic landscape.
