Stocks fell Tuesday as ongoing debt ceiling discussions appeared to yield little progress.
The S&P 500 dropped 1.12% to settle at 4,145.58, while the Nasdaq Composite pulled back 1.26% to close at 12,560.25. The Dow Jones Industrial Average lost 231.07 points, or 0.69%, to finish at 33,055.51.
Some traders interpreted the lack of any major updates on negotiations as a sign that lawmakers, perhaps, are struggling to progress as hoped.
Investors have been closely eyeing debt-limit negotiations in Washington, hoping for more certainty as the so-called June 1 X-date expected by Treasury Secretary Janet Yellen fast approaches. Some House Republicans on Tuesday questioned the accuracy of this projected default date.
On Monday, Kevin McCarthy and President Joe Biden met at the White House, in a discussion that the House speaker described as "productive" and "professional," although the hourlong talk concluded without a resolution.
"We are sending a very negative signal about our ability to run our economy, let alone be a anchor for the rest of the world," Mohamed El-Erian said on CNBC's "Squawk Box" on Tuesday. "And the market so far has actually dealt with it very well."
The Allianz chief economic advisor said he's "very impressed" by the recent market stability. El-Erian added that he views the S&P 500 as fairly priced despite this recent headwind and uncertainty surrounding the Federal Reserve's next rate move.
While lawmakers should achieve a resolution to the debt ceiling woes, Aspiriant's Sandi Bragar remains cautious as recession fears persist. Recent history suggests a downturn will likely come when the Federal Reserve completes its hiking cycle, she added.
"Everyone just feels like there is a party in the market and wanting to participate," the chief client officer said. "I don't think that it's really time to get too excited just yet. There's reason to be cautious here."
Elsewhere, Apple moved 1.5% lower after announcing a multibillion-dollar chip production deal with Broadcom. The chip stock gained 1.2%. Yelp popped 5.7% as an activist investor called for the company to explore a sale.
—CNBC's Christina Wilkie contributed to this report.
Stocks sold off on Tuesday as debt ceiling negotiations pressed on.
The S&P 500 dropped 1.12% to settle at 4,145.67, while the Nasdaq Composite shed 1.26% to close at 12,560.25. The Dow Jones Industrial Average lost 231.01 points, or 0.69%, to finish at 33,055.57.
— Samantha Subin
Consumer staples and utility stocks are vulnerable to this month's backup in 10-year and 30-year Treasury yields, said Chris Verrone, head of technical and macro research at Strategas Securities.
"Rates have continued to show some life over the last few weeks, and with upward pressure on yields has come downward pressure to Staples and Utilities both of which traded to multi month relative performance lows" on Monday, Verrone wrote in a note Tuesday. Utility stocks are faring worse than staples, "spending much of the last 6 months below the 200-day [moving average] and home to some pronounced top formations at the individual stock level."
Ten-year Treasury note yields touched 3.725% on Tuesday, the highest since March 13, and about 46 basis points higher just since April 6. A basis point is 1/100th of a percentage point.
Meanwhile, the S&P 500 Utility Index is down almost 5% in May (second worse only to energy stocks), S&P 500 Consumer Staples stocks are off by 4.2% in May, while the S&P 500 Index is down only 0.5% this month.
— Scott Schnipper, Michael Bloom
BlackRock debuted two actively managed ETFs on Tuesday, managed by two of the asset management giant's top investors.
The BlackRock's Flexible Income ETF (BINC) is managed by Rick Rieder, the firm's CIO of global fixed income. The actively managed fund has a net expense ratio of 0.40%, and is aiming for a yield of 7%.
BlackRock also debuted an active equity fund. The BlackRock Large Cap Value ETF (BLCV) is managed by Tony DeSpirito, the firm's global CIO of fundamental equities.
— Jesse Pound
Silver futures are down more than 5% over the past month, but Citi thinks this is a buying opportunity.
"Silver prices have retraced below $24/oz ... as weak economic data have undermined confidence in China's economic rebound. Having said this, our trade recommendation remains up 4.8%, and we see this pullback as a buying opportunity and reiterate our call for silver to hit $30/oz by year-end," wrote Citi's Viswanathrao Kintali. "We think this is achievable purely in response to a US growth rollover, however a major China easing would be a bullish kicker for the trade."
— Fred Imbert, Michael Bloom
Casino stocks Caesars, MGM and Wynn were all down more than 5% in the final hour of Tuesday's session.
Bloomberg reported Monday morning that China will likely see a peak of 65 million Covid infections a week in its next wave toward the end of June, citing a senior health official. The official said the country should see around 40 million infections per week by the end of May before reaching the peak.
— Alex Harring
Shares of a slew of Covid-19 vaccine makers surged on Tuesday.
Moderna popped 9.4%, while BioNTech and Pfizer jumped gained 10.1% and 2.6%, respectively.
The moves came amid reports of a potential new wave of Covid-19 infections in China that could lead to millions of new cases each week.
— Samantha Subin
News that Choice Hotels may acquire Wyndham Hotels & Resorts pushed shares of the latter to jump 7.4%, according to a report from The Wall Street Journal.
Shares of Choice Hotels fell 3.6% on the news. The two budget hotel franchises are currently in serious talks, according to the report.
— Hakyung Kim
Stocks traded near their lows as the final hour of trading commenced.
The Dow was last down about 183 points, or 0.6%. The S&P 500 lost 0.9% and Nasdaq Composite traded 1.1% lower.
— Samantha Subin
Broadcom is the "most underappreciated AI beneficiary" after its deal with Apple, according to Bank of America.
Analyst Vivek Arya hiked his price objective on the stock after Apple on Tuesday announced a multibillion-dollar deal with Broadcom for 5G radio frequency components made in the U.S., saying it removes an "overhang" on the stock.
"We believe this is a positive development as it removes one key overhang on AVGO stock – namely the risk of Apple's insourcing of connectivity components – surfaced in media reports earlier this year," Arya wrote in a Tuesday note.
Shares added about 2% during Tuesday's trading session.
— Sarah Min
Some House Republicans on Tuesday raised skepticism over Treasury Department Secretary Janet Yellen's deadline to raise the debt ceiling and avert a default.
"We'd like to see more transparency on how they come to that date," House Majority Leader Rep. Steve Scalise said Tuesday at a news conference.
He added that Yellen's Monday comments signal some "openness to the idea that June 1 may not be the so called X-date."
— Christina Wilkie, Samantha Subin
Advanced Micro Devices could be on track to gain a greater market share of the artificial intelligence accelerator market, according to Bank of America.
"AMD is on the verge of another large opportunity in the $80bn AI accelerator market (by CY27E) where AMD's share is again effectively zero against leader Nvidia," analyst Vivek Arya said.
The firm remains neutral on AMD stock but raised its price target on Monday.
CNBC Pro subscribers can read the full story here.
— Brian Evans
BlackRock CIO of global fixed income Rick Rieder said that he remains confident lawmakers will work out a deal on the debt ceiling.
"I think the markets and myself are putting a very high probability that something gets done. The timing of that is unclear," Rieder said at a media event Tuesday.
The fixed income investor acknowledged that Treasury Secretary Janet Yellen's warning of an early June deadline was earlier than many experts previously expected.
"I think there's a sense of urgency now that you've got to come to a conclusion on this over the next couple of weeks, and presumably get to at least a framework by the end of this week," Rieder added.
— Jesse Pound
Microsoft will keep gaining traction as investors add to artificial intelligence bets, according to Jefferies.
"MSFT has taken pole position in what is likely to be a decade-long industry evolution," Jefferies analyst Brent Thill said. "AMZN won round 1 of Cloud wars. MSFT could be the winner of round 2."
The firm reiterated a buy rating on Microsoft stock on Tuesday.
CNBC Pro subscribers can read the full story here.
— Brian Evans
These are some of the stocks making the biggest moves midday:
See the full list of stocks moving here.
— Alex Harring
The Federal Trade Commission's attempt to block the Amgen-Horizon Therapeutics deal will have a chilling effect on large deals, valued at $15 billion or more, in the biopharma space, said Andy Acker, a portfolio manager at Janus Henderson Investors. However, that could accelerate smaller deals, he said, speaking at a virtual conference sponsored by the asset manager.
More than $70 billion in deals have been announced in the biotech and pharmaceuticals industry so far this year — more than in all of 2022, he said. Two of the key forces behind this activity are the need for larger pharmaceutical companies to replace the revenue they are losing due to patent expirations and the difficulty smaller companies are having accessing capital.
Horizon shares are down more than 11% since the start of the year, as concerns about the Amgen deal weigh on its stock price.
— Christina Cheddar Berk
Nvidia will remain the top player in the artificial intelligence space as investments grow, according to Stifel.
"NVDA remains the best-positioned component/ systems company to benefit from the AI investment cycle in the medium term, in our view," Stifel analyst Ruben Roy said.
The firm reiterated a hold rating on Nvidia stock with a renewed price target. Shares of Nvidia slipped 1%.
CNBC Pro subscribers can read the full story here.
— Brian Evans
Shares of Yelp jumped more than 9% after activist investor TCS Capital Management took a stake in the firm, asking in an open letter that the company should explore strategic alternatives, including a sale.
TSC Capital built a bet of more than 4% in Yelp, becoming the company's top five shareholders. TCS said Yelp is "shockingly undervalued" and could be sold to a private equity buyer for at least $70 per share, a more than 120% premium. Another option TSC brought up is to explore a tax-free merger with internet services company Angi to be a leader in the $500 billion home services market.
— Yun Li
Broadcom rose on Tuesday following a chip production deal with Apple to trade near all-time highs dating back to August 2009, when Avago went public.
Microsoft also rose to trade at its highest level since January 2022, while Advanced Micro Devices hit its highest point since April 2022.
These stocks also notched new 52-week highs:
Here are the name hitting fresh lows:
— Samantha Subin
Shares of hard-hit regional bank stock PacWest popped more than 19% on Tuesday.
The move built on gains from Monday as the bank shared its plan to sell real estate loans worth about $2.6 billion to a unit of Kennedy-Wilson Holdings.
Other regional banking names also moved higher, including shares of Zions Bancorporation, Comerica and KeyCorp.
Amid the recent banking turmoil that contributed to the collapse of Silicon Valley Bank and Signature Bank, PacWest shares have dropped more than 64% this year and sit about 75% off their 52-week highs.
— Samantha Subin
A deal will be likely reached on the debt ceiling, Sen. Ted Cruz believes.
""I think a deal will be reached, but I worry that the chances of a default are greater than they ever have been," the Republican from Texas said in an interview with CNBC's "Squawk Box."
"I worry that this White House is reckless enough to force a default. I don't think that'll happen. I think that's less likely than not. But the odds are higher than we should be happy with."
— Michelle Fox