Dow sheds more than 150 points as Moody’s bank downgrade rekindles market selloff: Live updates

The three major indexes finished Tuesday's session lower.

The Dow finished down about 0.5%, which translates to more than 150 points. The S&P 500 ended 0.4% lower, while the Nasdaq Composite slid 0.8%.

All three were off session lows at close, with the indexes all down more than 1% at their worst respective points in the trading day.

— Alex Harring

Investors are wondering how much of the impacts of previous economic tightening measures from the Federal Reserve have yet to be felt, according to Yung-Yu Ma, BMO Wealth Management's chief investment officer.

"For a while, there was a belief that a lot of the the impact of the Fed tightening and central bank tightening globally had already taken place," he said. "There's starting to be a bit more of a realization that the impact of those higher interest rates still have a while to permeate through the U.S. and global economy."

Ma attributed Tuesday's slide as a "moment of assessment" as investors contemplate the strength of the 2023 market rally and what lies ahead for the economy after the Fed's interest rate hikes. And now may not be the time to "go maximum aggressive" in the stock market, he said, given the uncertainty.

— Alex Harring

Truist is optimistic on DraftKings on the back of the company's second-quarter earnings, and upgraded the stock to buy from hold.

DraftKings announced its quarterly results Thursday, in which it managed to beat Wall Street's expectations. The company posted a smaller-than-expected loss per share on revenue that exceeded estimates.

Jonas said the company "showed us the money — a quicker and more visible path to profitability" with the report.

More about his upgrade can be found here.

— Hakyung Kim

Treasurys are in vogue, but their current yields pale compared to where they've stood historically, according to an analysis from Joseph Kalish, chief global macro strategist at Ned Davis Research.

Since 1953, yields on 10-year Treasurys have averaged 5.5%, while rates on the 5-year note have averaged at 5.3%, according to the firm. On Tuesday, the 10-year Treasury was yielding just over 4%, while the 5-year yielded about 4.1%.

Still, yields have come a long way since last year. "Since its peak of 9.1% in June 2022, the y/y change of CPI inflation has plunged to 3.0%," wrote Kalish. "Over that same time, 10-year yields have risen by roughly 100bp!"

Indeed, bonds are looking hot from a portfolio diversification perspective, Kalish added. "Bonds are back as an effective portfolio diversifier… especially during periods of range-bound inflation that we are likely in," he said, noting that bonds are "extremely oversold."

-Darla Mercado

Chegg shares gained 5% after the education technology company reported solid second-quarter results, and shared commentary that eased some recent AI-related fears.

Earnings, excluding items, came in at 28 cents a share, slightly behind the 29 cents expected by Refinitiv. Meanwhile, Chegg reported revenue of $183 million, ahead of the $177 million expected.

Shares tanked more than 40% one day in May after posting results that signaled rising threats to its business model from ChatGPT.

In its latest release and earnings call, the company said that many students have come to view ChatGPT and Chegg as "complementary" services with varying use cases, and highlighted some AI-focused initiatives. Chegg said it expects margins to recover in the fourth quarter after a third-quarter dip.

— Samantha Subin

Stocks remained down, but were off session lows, as the final hour of trading commenced.

The Dow was down nearly 200 points, or 0.5%. The 30-stock index traded down more than 450 points at session lows.

The S&P 500 slipped 0.6%, off a low of 1.2%. The Nasdaq Composite slipped 0.9% after reaching as low as 1.6% down.

— Alex Harring

BMO Capital Markets analyst Keith Bachman named Adobe its top pick in a Tuesday note, replacing Palo Alto Networks. BMO has an outperform rating on the stock. 

"For ADBE, we believe that generative AI can be a meaningful tailwind to net new ARR, starting mostly in FY24. We believe that ADBE will price solutions at a modest increase (low-double-digits) in order to gain more seat adoption, though we expect more formal announcements closer to the Analyst Day in October," said Bachman. Generative AI can also help with the price and mix of Creative Cloud solutions, according to the analyst. 

To read more about his call, click here.

— Hakyung Kim

Health care stocks have been able to sidestep the S&P 500's leg down in Tuesday's session.

The sector was up 0.3%, making it the best performing of the 11 in the index. Energy was flat, while the other nine traded down. As a whole, the index was down about 0.7%.

Eli Lilly led the health-care sector higher, jumping nearly 14% on the back of a better-than-expected earnings. Organon & Co. was the next best performer with an advance of more than 9%, also rising after delivering a strong quarterly report and raising full-year guidance.

— Alex Harring

U.S. Treasury yields climbing could pose an "underpriced" risk to stocks, Bank of America warned.

Analyst Gonzalo Asis noted one measure of the correlation between the S&P 500 and 10-year U.S. Treasury yield has reached a point of negativity not seen since 2000.

On its surface, that can mean the stock market is especially vulnerable to interest rates. It's something to keep in mind as bond yields can offer insight into the long-term path of the stock market.

— Alex Harring

A measure of fear in stocks just hit the highest level in more than two months on Tuesday after Moody's put several large U.S. banks on downgrade watch.

The Cboe Volatility Index, better known as the VIX, hit a high of 18.09, the highest level since May 31st when it VIX traded as high as 18.40.

The dollar index also climbed to a session high of almost 0.7% today, putting it on pace for the best day since July 27.

— Gina Francolla, Tanaya Macheel

Pot stock Tilray Brands jumped more than 25% after the company announced that it was extending its push into the beer business.

Tilray announced on Monday afternoon that it had agreed to acquire eight craft beer brands from Anheuser-Busch, including Shock Top and Blue Point Brewing.

The company said in a press release that the deal, combined with Tilray's current brands, will make it the fifth largest craft beer brewer in the United States. Tilray's stock has dropped more than 90% from its highs in 2018, and it has a market cap of around $2 billion.

Shares of Anheuser-Busch were down about 0.5% after the announcement.

— Jesse Pound

A sell-off in Goldman Sachs amid pressure on the broader banking sector has dragged on the Dow.

Goldman was the worst performer in the 30-stock index on Tuesday with a loss of 2.3%. Salesforce and Intel were the only others down more than 2%.

By comparison, the blue-chip average slipped 0.8% as a whole. Four-fifths of Dow members traded below flat.

Amgen continued its post-earnings ascent and was the best performing member with a gain of 3.5%. If the stock finishes Tuesday higher, it would be the fourth straight winning session for the stock. Boeing, the next best performer, added a relatively modest 0.3%.

— Alex Harring

Telsey Advisory Group says it's moving to the sidelines on Home Depot and Lowe's. Analyst Joseph Feldman downgraded both stocks to market perform from outperform.

In two Monday notes, Feldman said he expects the two companies will "experience a slightly steeper slowdown related to the weak housing market trends, [and see] consumers remaining cautious with spending, especially on big ticket items and projects."

Shares for Home Depot and Lowe's fell 0.9% and 1.7%, respectively.

To read more about the downgrades, click here.

— Hakyung Kim

Check out some of the companies making headlines in midday trading:

• Beyond Meat — The plant-based meat company fell 16% during midday trading after missing on second-quarter revenue, citing weak U.S. demand. Beyond Meat posted an adjusted loss of 83 cents per share on $102.1 million in revenue, while Refinitiv forecasted 86 cents and $108.4 million.
• Novo Nordisk — Shares of the pharmaceutical rallied 18% after new trial data showed Novo Nordisk's weight loss drug Wegovy cut the risk of major cardiovascular events by 20%.
• Organon — The stock advanced 8% on better-than-expected earnings for the second quarter. The health care company reported earnings per share of $1.31. Analysts surveyed by StreetAccount expected 97 cents per share. Organon posted $1.61 billion in revenue, beating analysts' expectations of $1.57 billion.

Read the full list here.

— Pia Singh

Solar stocks and clean energy plays both hit new lows going back to May 2022.

Earlier Tuesday morning, the Invesco Solar ETF was down 1.36%, while the iShares Global Clean Energy fund declined 0.91%.

Shares of SolarEdge Technologies were down about 1.5%. SunPower and Clearway Energy were off by more than 4% each. The U.S. listed shares of JinkoSolar fell more than 5%.

— Sarah Min, Gina Francolla

Second-quarter earnings season is nearing a close, with results out so far from 89% of the S&P 500.

Of the nearly 450 companies that have reported results, 79% have topped earnings expectations while 63% have surpassed revenue estimates, according to Refinitiv.

For the period, earnings are expected to decline 3.8% from a year ago.

— Samantha Subin, Robert Hum

Some on Wall Street express cautious sentiments about the stock market.

Credit Suisse global equity strategist Andrew Garthwaite said he's now "incrementally more negative" on stocks. He also said a recession would likely hit next year.

Meanwhile, Bank of America's Stephen Suttmeier said a tactical correction is already underway.

And Marko Kolanovic, JPMorgan's top stock picker, recommended investors should stay underweight on equities, while noting people may be too optimistic about the state of the economy.

— John Melloy, Sarah Min and Jesse Pound

Clinical-stage biopharmaceutical company Sagimet Biosciences could see its treatments reach a breakout stage, which could send its share price soaring, according to Goldman Sachs. Analyst Andrea Tan initiated a buy rating on shares in a Tuesday note.

Sagimet Biosciences focuses on developing fatty acid synthase (FASN) inhibitors, which can treat a range of diseases including various cancers, non-alcoholic steatohepatitis (NASH) and acne. The company's interim data has shown its lead treatment candidate, denifanstant, can reduce liver fat levels for patients with NASH — which could help support the treatments' advancement to a pivotal program. 

The stock has been publicly traded since July 14, and is trading slightly below its IPO level.

To read the full story on the upgrade, click here.

— Hakyung Kim

The SPDR S&P Regional Banking ETF (KRE) is down down 3.4% Tuesday. The basket of regional bank stocks managed to recoup some of its losses earlier in the trading session, when it lost as much as 4.3%.

KRE names leading Tuesday's losses include BankUnited, Bank of Hawaii, Fulton Financial, Citizen Financial and Zions Bancorporation. The five stocks all declined 4.5% or greater as of Tuesday morning.

— Hakyung Kim, Gina Francolla

A sell-off on Wall Street has intensified.

The Dow was down around 450 points, or 1.2%, shortly after 10:15 a.m. ET. The S&P 500 lost 1.1%, while the Nasdaq Composite dropped 1.4%.

— Alex Harring

Datadog shares plummeted more than 20% after the software company issued weaker-than-expected revenue guidance for the third quarter and trimmed its full-year outlook.

The fall in shares came despite a top-and-bottom line beat for the second quarter, with Datadog reporting adjusted earnings of 36 cents a share on $509.5 million in revenue. That came in ahead of 28 cents expected on revenues of $500.6 million, according to Refinitiv.

For the third quarter, the company said it expects revenues to range between $521 million and $525 million, below the $536.2 million expected by analysts polled by FactSet.

Datadog also trimmed revenue guidance for the full year, saying it now anticipates sales to range between $2.05 billion and $2.06 million. The company previously said it expected between $2.08 billion and $2.10 billion in revenue.

— Samantha Subin

Stocks opened Tuesday's session lower.

The Dow was down more than 200 points, or 0.6%. The S&P 500 shed 0.5%, while the Nasdaq Composite slipped 0.8%.

— Alex Harring

A raft of poor signals is weighing on investor sentiment Tuesday morning, including weak trade data out of China, as well as credit rating cuts from Moody's on 10 small and midsize banks. UPS also cut its guidance, citing falling demand and rising costs following a new labor contract.

However, Oanda's Ed Moya said the suddenly "gloomy" global macroeconomic backdrop has Wall Street hopeful the Federal Reserve could stop raising rates.

"Stocks are down, but it is not too ugly as Wall Street is starting to become very confident that global economic weakness will do the trick in getting inflation back to the Fed's 2% target," Moya wrote Tuesday. "Rate hike odds continue to edge lower for the September and November FOMC meetings, but the rate cuts for 2024 keep growing."

Traders are expecting an 85.5% likelihood the Fed will keep rates where they are when policymakers convene in September, according to the CME Fedwatch Tool. They expect a 14.5% chance the central bank could raise rates by another quarter percentage point.

Meanwhile, in January, they're expecting a 47.4% probability the Fed will hold, and a 33.2% likelihood the Fed will cut rates by a quarter percentage point.

— Sarah Min

AMC Entertainment jumped nearly 5% after the movie theater stock surpassed analyst expectations in the second quarter.

The company reported 1 cent earned per share, while analysts surveyed by Refinitiv anticipated a loss of 4 cents per share. Revenue came in at $1.35 billion for the quarter, ahead of the consensus estimate of $1.29 billion.

AMC shares have climbed nearly 26% so far this year.

— Alex Harring

The U.S. central bank could be at the end of its current interest rate-hiking cycle, Philadelphia Federal Reserve President Patrick Harker said Tuesday.

"Absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work," Harker said in prepared remarks for a speech in Philadelphia.

But he also said there may not be any cuts to rates in the near future.

"Allow me to be clear about one thing, however. Should we be at that point where we can hold steady, we will need to be there for a while," he said. "The pandemic taught us to never say never, but I do not foresee any likely circumstance for an immediate easing of the policy rate."

— Jeff Cox

Check out some of the companies making headlines in premarket trading:

• Banks — U.S. bank stocks fell broadly after Moody's cut ratings on several institutions, including M&T Bank, Citizens Financial, Bank of New York Mellon and Truist Financial. Moody's cited a higher interest rate environment as well as asset-liability management risks (ALM) as continued headwinds for U.S. banks. Major banks including Goldman Sachs and JPMorgan Chase traded more than 1% lower, while the regional bank ETF (KRE) fell nearly 3%.
• Home Depot, Lowe's — Both home improvement retailers fell more than 1% each in premarket trading. Telsey Advisory Group downgraded both stocks to market perform earlier on Tuesday, over more cautious consumer spending and weakening housing market trends.
• Eli Lilly — The pharmaceutical stock climbed 8.6% after an earnings beat. The company reported an adjusted $2.11 per share on revenue of $8.31 billion, while analysts polled by Refinitiv forecasted $1.98 and $7.58 billion.

Read the full list here.

— Brian Evans

Investors modified exposure to Dish and EchoStar after Charlie Ergen said he would merge the two.

Shares of EchoStar tumbled more than 10%, while Dish rose more than 1%. The all-stock deal marks a reunion for the two companies, which have been separate for about 15 years.

— Michael Sheetz, Alex Harring

Under Armour shares inched higher on a better-than-expected earnings report for its first fiscal quarter.

The retailer's shares rose 0.3% after reporting 2 cents in earnings per share, while analysts polled by Refinitiv anticipated a loss of 2 cents. Revenue came in at $1.32 billion, slightly ahead of the $1.3 billion forecasted by Wall Street.

Shares have struggled this year despite the broader market's rally, dropping more than 24% since the year began.

— Alex Harring

Pharmaceutical stock Eli Lilly advanced around 10% in premarket trading as investors cheered a better second-quarter report than Wall Street anticipated.

Eli Lilly posted $2.11 in earnings per share, excluding items, while analysts polled by Refinitiv expected $1.98. Revenue also came in ahead of Wall Street's consensus, with the company reporting $8.31 billion while analysts forecasted $7.58.

Shares are up more than 24% this year.

— Alex Harring

Shares in Danish pharmaceutical company Novo Nordisk soared more than 15% on Tuesday after headline results from a trial showed that its weight-loss drug Wegovy cut the risk of heart disease by 20% in adults with obesity.

The result lifted the broader sector in Europe and the U.S., with shares in stateside rival Eli Lilly climbing in pre-market trade.

— Elliot Smith

UPS shares dipped 5.6% after the package delivery giant posted weaker-than-expected revenue for the second quarter.

The company's revenue for the period came in at $22.1 billion. Analysts polled by Refinitiv expected $23.1 billion.

UPS also lowered its full year revenue outlook, citing labor negotiations and the cost of a tentative agreement with teamsters.

— Fred Imbert

Bank shares were under pressure after Moody's lowered the credit rating on multiple banks, including M&T Bank.

JPMorgan Chase and Citigroup fell more than 1% each. Goldman Sachs, Morgan Stanley and Wells Fargo also dipped in the premarket. The SPDR S&P Bank ETF (KBE) slipped 1%, while its regional banking counterpart, the KRE, lost 1.6%.

Sentiment in the banking sector was also dampened by the Italian government announcing a 40% windfall tax on "excess" profits in 2023.

— Fred Imbert

U.S. Treasury yields fell on Tuesday as investors assessed the outlook for interest rates and Federal Reserve monetary policy ahead of comments from policymakers and key inflation data expected this week.

At 4:25 a.m. ET, the yield on the 10-year Treasury was down by over six basis points to 4.0140%, slipping from multi-month highs touched at the end of last week. The 2-year Treasury was trading more than one basis point lower at 4.7409%.

— Sophie Kiderlin

Palantir Technologies lifted its forecast for annual revenue on Monday as it sees an opportunity to commercialize artificial intelligence, but not all analysts are on the same page.

Dan Ives, managing director at Wedbush Securities, is bullish on the U.S. firm's AI ambitions. The investment firm said "a star is born," referring to Palantir's AI platform, AIP. The platform allows militaries and businesses to tap large language models and AI to support decision-making.

However, another analyst disagreed and said Palantir is "not truly a generative AI company."

"When we look at Palantir and based on our conversations with [industry observers and Palantir's employees], this does not appear to be anything truly differentiated when it comes to generative AI," said Rishi Jaluria, managing director at RBC Capital Markets, on CNBC's "Squawk Box Asia" on Tuesday.

Read the full story here.

— Sheila Chiang

China's trade plunged more that expected in July, with the country recording a 14.5% year-on-year drop in exports, and a 12.4% fall in imports.

Both metrics were lower than expectations from economists polled by Reuters, who expected a 12.5% slide in exports and a 5% drop in imports.

Customs data from China showed that total trade for July came in at $482.92 billion, a 13.6% fall year on year, while the country's trade surplus stood at $80.6 billion, down 19.4% compared to July 2022.

— Lim Hui Jie

Household spending in Japan fell 4.2% year-on-year in June, a steeper fall than the 4% recorded in May reflecting a fourth straight month of decline, according to official data.

Food still made up the largest proportion of household spending, the largest fall was spending on furniture and household utensils, down 17.6% year on year.

The average monthly consumption expenditures per household for June was 275,545 yen ($1,932.41) , while the average monthly income per household stood at 898,984 yen in June, down 5.6% from the previous year.

— Lim Hui Jie

Amgen's nearly 4% gain on Monday helped lift the Dow Jones Industrial Average, but it also put the pharmaceutical giant's shares over an important level.

Monday's close marked the first time Amgen closed above its 200-day moving average since April 6. The stock also had the greatest positive point impact on the 30-stock index, accounting for nearly 64 positive Dow points.

The 200-day moving average has a special meaning for chart technicians. For instance, it can give some insight into whether the stock is heading into an uptrend or a downtrend. In this case, Amgen's close above that threshold could be a positive sign.

Amgen's gains arrive on the heels of its second-quarter earnings beat, issued late last week. The company posted earnings of $5 per share, excluding items, on revenue of $6.99 billion. Analysts polled by FactSet anticipated earnings of $4.49 and revenue of $6.66 billion.

-Darla Mercado, Gina Francolla

Stock futures were little changed Monday night after all three major indexes closed higher during regular trading.

Futures tied to the Dow Jones Industrial Average added 9 points or 0.03%. S&P 500 and Nasdaq 100 Futures climbed 0.06% and 0.07%, respectively.

— Brian Evans