The Dow Jones Industrial Average fell nearly 200 points on Tuesday as traders assessed a spike in oil prices and what that could mean for the global economy.
The Dow dropped 198.77 points, or 0.59% to close at 33,402.38. The S&P 500 declined by 0.58% to end the session at 4,100.60. Both indexes snapped a four-day win streak. The Nasdaq Composite slipped 0.52%, closing at 12,126.33.
The market losses followed the latest job openings report. In February, the number of available positions dropped below 10 million for the first time in nearly two years, a sign the once-hot labor market supporting the economy is starting to slow.
"There's still plenty of job openings relative to [the] unemployed," said Ed Yardeni, president of Yardeni Research. "The market is very sensitive to any minor change in the direction that they don't want to see."
To be sure, markets have been resilient as of late, with the major averages rising even when faced by persistent inflation, a banking crisis and higher rates.
"Resilient is a good word," said Julian Emanuel, senior managing director at Evercore ISI. " [The] bottom line is that the economic forward looking backdrop continues to soften even as present conditions (2-3% GDP in 1Q) remain strong, set against already defensive positioning, stocks remain deadlocked in the 3800 -4200 range."
This week, the energy market became another potential source of uncertainty, after OPEC+ announced it was slashing output by 1.16 million barrels of oil per day. On Monday, West Texas Intermediate futures had their biggest daily gain in nearly a year on the news.
"Given the transition the world is undergoing as it embraces 'clean and green energy,' OPEC+ understands all too well that its still highly valued 'liquid gold' will at some point begin to lose its shine," said Quincy Krosby, chief global strategist for LPL Financial.
"Until then, as the countries dominating OPEC+ prepare for the future by spending trillions of dollars rebuilding infrastructure and refocusing away from crude oil as their primary source of income, managing the price of crude will be used more directly and aggressively than was anticipated," she added.
The three major averages fell on Tuesday.
The S&P 500 shed 0.58% to close at 4,100.60, and the Dow Jones Industrial Average fell 198.77 points, or 0.59%, to close at 33,402.38. The two indexes snapped four-day win streaks.
The Nasdaq Composite slipped 0.52% to end the day at 12,126.33.
-Darla Mercado
Morgan Stanley expects the retail media advertising market to hit $130 billion by 2025, and these stocks stand to benefit the most.
In a note to clients Tuesday, analyst Matthew Cost called advertising tech companies Trade Desk and Criteo the biggest beneficiaries of the growing market, and names that should prosper from a drive by retailers to harness consumer data and create online ads.
"If TTD and CRTO are able to launch increasingly effective tools and work with retailers to prove out the efficacy (and data security) of their retail media solutions, we believe it would position both companies to deliver better than expected results," he wrote.
While Amazon remains and early leader in the space, Cost predicts a roughly $12 billion opportunity for service retailers like Target and Walmart to scale up product promotion tools and launch campaigns over the next few years. Many of these names, he noted, are already partnering with advertising tech companies.
Software stocks like Snowflake also stand to gain from this burgeoning advertising market, benefitting from "demand for their data clean room and identity solutions" that can increase efficiency and data sharing between brands and retailers.
— Samantha Subin
Industrial stocks weighed down the S&P 500 in Tuesday's session.
The sector was the worst of the broad index's 11 with a drop of 2.1%. By comparison, the S&P 500 was down around 0.6%.
United Rentals and Generac dragged on the sector with drops of more than 7% and 6%, respectively. Caterpillar, which is also a member of the Dow, was among the worst performers in the sector as well with a 5% slide.
Seven of the 11 sectors joined industrials in the red for the session. Utilities (up 0.4%), health care (up 0.2%) and communication services (up 0.1%) were the three able to buck the downtrend.
— Alex Harring
Piper Sandler said it's feeling more cautious about apparel retail stocks after talking with Gen Z about their spending plans in its latest teen survey. The firm called out three stocks where it advises investors to tread carefully: Revolve, Lulu's and AKA Brands, which owns the Princess Polly brand.
Those polled by Piper reported that they expected to spend an average of $2,419 this year, up 2% from responses in spring 2022, and 4% higher than in the fall. But it's the guys who are bumping up Gen Z's spending plans, the firm said.
Upper-income males expect their spending to rise 6% from last year and climb 1% from the fall, but females of all incomes are predicting a 1% gain year over year and a 6% decline from the fall.
Notably, this is the first time females showed a decline in wallet share since fall 2019, Piper Sandler said.
Teen girls are looking to spend more on accessories versus a year ago, but clothing purchases will stay flat with last year's levels. The purse strings are getting tighter for footwear purchases, however, with projected spending in the category falling 5% from last spring.
The trends are more stark among upper-income teen girls, where total spending is expected to drop 3%. Upper-income Gen Z girls are budgeting 25% more for accessories than they did in the fall, but the apparel budget shrank 5% and footwear is off 8% over the same time period.
Even with the overall gain, spending among teenagers remains significantly below its fall 2006 peak, when those polled estimated annual spending of $3,023 a year.
—Christina Cheddar Berk
JPMorgan upgraded insurance company Prudential Financial on Tuesday to overweight from neutral, citing its "superior business mix," strong balance sheet and significant underperformance. The stock was recently down 0.5%, but has recently pushed into the green after dropping more than 17.5% this year.
The firm said that while its long-term outlook on the life insurance sector remains negative, it is more confident in stocks buoyed by expected healthy near-term results, a strong equity market and pullback in valuation levels. "We are incrementally upbeat on firms with a lower-risk liability profile and with strong balance sheets," equity analyst Jimmy S. Bhullar wrote in a recent note to clients.
In addition to Prudential, JPMorgan raised its full-year estimates for life insurance companies including American Equity Investment Life Holding, Aflac, Equitable Holdings, MetLife and Voya Financial. The firm said it expects these companies to benefit from a weaker dollar and an increased value from buybacks given lower stock prices.
Bhullar named Voya Financial as the top pick in the sector, given the JPMorgan's positive outlook for business trends associated with the company and Voya's depressed valuation. The stock is up 15.7% so far this year.
— Pia Singh
Top Wall Street strategist Marko Kolanovic said the recently rally in stocks was merely a dead cat bounce as there has been no material improvement in fundamentals.
"For a rational investor, we think this makes little sense and that most of the inflows over the past 2 weeks were driven by systematic investors, short squeeze and a decline in VIX," Kolanovic, JPMorgan's chief global markets strategist, said in a note Monday.
The widely followed strategist said he expects a reversal in risk sentiment and the market re-testing last year's low over the coming months.
— Yun Li
Gold futures were higher on Tuesday, gaining nearly 2% after hitting its highest level since March of 2022.
Bullion reached a session high of $2,043 per ounce is on track for its fifth positive session out of the last six. Gold flew past $2,000 per ounce after bond yields fell on news of weaker than expected available jobs data from the Labor Department.
So far this year, gold prices have gained 11.6%. The precious metal is often touted as a hedge against inflation.
— Brian Evans, Nick Wells
The common stock of theater chain AMC dropped about 20% after the company announced a settlement deal with a group of shareholders that could pave the way for further capital raises.
Under the terms of the deal, the company would get to increase its number of authorized shares, there would a 10-to-1 reverse stock split, and the preferred APE shares would get converted into common stock. In exchange, the suing group of shareholders would receive additional common stock. The shareholders attorneys said in a statement the shares would be valued at more than $100 million at recent market prices.
The APE preferred shares rose 8% following the news.
The settlement should help the cash-strapped theater chain bulk up its balance sheet. The deal could allow to AMC to raise up to $16 billion of equity, one Wall Street analyst told Reuters.
— Jesse Pound
Although environmental issues are very much top of mind for many teens, they likely don't see plant-based meat as a solution, according to the latest Piper Sandler teen survey.
The firm surveys teens twice a year, and has for more than 20 years. The latest edition, which polled 5,690 teens between Feb. 13 and March 21, found Impossible is the preferred plant-based brand among teens with a 39% preference. Beyond Meat had a 34% preference. That said, only 14% of teens are eating meat alternatives, and within that group 25% reported that they planned to eat less of these products over the next year. Piper Sandler said that was an acceleration of the number of teens planning to reduce their consumption of meat alternatives from both their fall 2022 and spring 2022 surveys.
Beyond Meat shares remain far below their 52-week high of $51.98, but the stock has been gaining ground since the start of the year, with shares up nearly 33% since Jan. 1. The stock was unchanged in trading early Tuesday at $16.34.
Both Impossible and Beyond Meat have pitched their products as healthier for the environment.
—Christina Cheddar Berk
Billionaire investor Ken Griffin's flagship hedge fund posted a small gain in March despite the banking crisis, according to a person familiar with the returns.
Citadel's multi-strategy flagship Wellington fund gained 1.4% last month, bringing its 2023 performance to 4.2% through March, the person said. The hedge fund has slightly underperformed the S&P 500, which gained 3.5% in March and more than 7% year to date.
Griffin's hedge fund scored a stellar year in 2022 with a 38% return, marking the firm's best year ever.
— Yun Li
Bank earnings season is right around the corner, and the reports are likely to reinforce the narrative that the biggest banks are the winners of regional banking crisis that hit the U.S. last month, according to Wells Fargo analyst Mike Mayo.
"The change in regulation for them is not so much, and they have benefitted from an inflow of deposits. And by the way, credit quality is still good," Mayo said on "Squawk on the Street."
First quarter earnings reports could show 10% year over year earnings growth for the large banks, and could spur a return of "greed" among investors for bank stocks, Mayo said.
He added that increased fees to the FDIC to pay for the collapse of the smaller banks would not make a major impact on future profits.
— Jesse Pound
Job openings plunged in February in a sign that the ultra-tight labor market may be loosening up.
Available positions fell to 9.93 million for the month, down more than 600,000 from January and well below the FactSet estimate of 10.4 million, according to a Labor Department report Tuesday.
The decline marked the first time openings were below 10 million since May 2021.
Separations and hires also both moved lower though quits rose to just over 4 million.
—Jeff Cox
Costco's status as a defensive stock with some growth upside is being put to the test in recent months, according to Wells Fargo.
Analyst Edward Kelly said in a note to clients on Tuesday that the retailer could see comparable sales growth of around just 2% for the first quarter, excluding fuel.
"We continue to find it hard to get more bullish on COST. While it's a very high quality company with defensive characteristics, we believe momentum matters at the current valuation and see upcoming headwinds. Comps look poised for a sustained period of below trend performance ... which could ultimately result in risk to consensus EPS estimates," Kelly wrote.
Wells Fargo has an equal weight rating on Costco, with a price target of $475 per share. The stock closed at $497.03 per share.
Kelly is in the minority of being skeptical of Costco. Of the 39 analysts who cover Costco, 27 have buy or strong buy ratings, according to Refinitiv.
— Jesse Pound
This chipmaker with "best-in-class" free cash flow returns could rally nearly 30% in the near future, according to Bank of America.
Analyst Vivek Arya reiterated his buy rating on this analog chipmaker and upped his price target to $250 per share, citing a combination of offensive and defensive attributes.
Limited consumer exposure and a wide-range of growth projects in sectors like electric vehicles and digital healthcare also situate the company for strong sales and earnings growth, he added.
Read more on the call from Bank of America here.
— Samantha Subin
One software stock is increasingly well positioned to weather a difficult macro environment, according to Baird.
Analyst Rob Oliver upgraded shares of this company to an outperform rating, saying that its end-market resiliency and reasonable valuation create an attractive risk-reward.
"We believe ongoing strong execution and combination of 20% + revenue growth and operating/FCF margin expansion could help drive multiple expansion over time," he wrote.
Read more on the call from Baird here.
— Samantha Subin
The S&P 500 and Nasdaq Composite each rose by 0.1%, while the Dow Jones Industrials dipped slightly to start Tuesday's session.
— Fred Imbert
Credit Suisse Chairman Axel Lehmann apologized to shareholders on Tuesday for the bank's collapse and controversial takeover by UBS.
"I apologize that we were no longer able to stem the loss of trust that had accumulated over the years, and for disappointing you," Lehmann said during Credit Suisse's annual general meeting. This marked the first time the bank's leaders addressed the public since the buyout deal.
Swiss authorities helped broker an emergency rescue of the troubled bank by its larger domestic rival for just 3 billion Swiss francs, over the course of a weekend in late March.
The deal, which was facilitated by Swiss regulators to stem a wider global banking crisis, remains entangled in legal and logistical challenges. Neither UBS nor Credit Suisse shareholders were allowed a vote on the deal.
— Hakyung Kim
Etsy shares popped more than 4% before the bell after Piper Sandler upgraded shares to overweight from neutral, citing a reacceleration in active buyer growth.
"While we acknowledge that macro conditions remain pressured and consumer spending may be tipping to the downside, we believe ETSY has growth company characteristics at a GARP valuation," wrote analyst Edward Yruma.
Read more on the upgrade here.
— Samantha Subin
Disney CEO Bob Iger said Florida Gov. Ron DeSantis actions against the company were "anti-business" and "anti-Florida."
Iger responded to the latest developments in the feud between the company and the governor during the Disney shareholder meeting Monday. Earlier, DeSantis asked the state's inspector general to determine whether an agreement signed by a Disney-allied board that limits control over the company and its district was legal, or if any company executives were involved.
He said the company, while noting the creation of jobs and tourism boost it provides to the state, was being retaliated against for free speech.
"A year ago, the company took a position on pending Florida legislation," Iger said in an apparent reference to what critics have called the "Don't Say Gay" bill. "And while the company may have not handled the position that it took very well, a company has a right to freedom of speech just like individuals do."
Disney shares advanced 0.6% in the premarket. The stock closed Monday's session down about 0.4%.
— Alex Harring, Sarah Whitten, Kevin Breuninger
Here are some of the stocks making the biggest moves before the bell.
Etsy — The e-commerce company's shares rose 3.9% after Piper Sandler upgraded them to overweight from neutral. The firm said that it thinks Etsy's marketplace strengths will "help reaccelerate active buyer growth." Shares are down 9.6% in 2023.
Virgin Orbit — The satellite launch company sank 14% in the premarket after filing for Chapter 11 bankruptcy protection. Virgin Orbit also said it would lay off nearly all of its workforce.
Boeing — The aerospace manufacturer's stock dropped 0.8% after Northcoast Research downgraded shares to a sell rating. The research firm cited expected changes to commercial aircraft production, resetting of consensus forecasts and volume headwinds ahead for Boeing this quarter after communicating with its contacts in the sector.
Check out the full list here.
— Hakyung Kim