The S&P 500 slipped on Tuesday after Federal Reserve Chair Jerome Powell said interest rates may need to stay elevated.
The broad index lost 0.21% to finish at 5,051.41, while the Nasdaq Composite shed 0.12% to 15,865.25. The Dow Jones Industrial Average rose 63.86 points, or 0.17%, to 37,798.97, lifted by UnitedHealth shares. The 30-stock blue-chip index snapped a six-day run of losses.
Stocks were choppy in afternoon trading after Powell said the current state of economic policy should remain in place amid sticky prices.
"More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal," the central bank chief said during a panel discussion.
However, the Dow was buoyed by UnitedHealth's rally of more than 5% on the back of better-than-expected revenue for the first quarter. That outweighed fellow Dow member Johnson & Johnson, which fell around 2% on the heels of mixed quarterly results.
Morgan Stanley advanced 2.5% after beating analysts' consensus forecasts on both lines. Bank of America tumbled 3.5% after announcing profit and revenue fell.
America's largest companies have given Wall Street reason for optimism in the early innings of the new corporate earnings season. Of the less than 10% of S&P 500-listed firms that have reported financials, nearly 4 of every 5 have exceeded Wall Street consensus estimates, according to FactSet.
But higher rates weighed on investors. The 2-year U.S. Treasury yield briefly spiked above 5% on Tuesday following Powell's remarks.
"Powell moved more decidedly in a hawkish direction," said Quincy Krosby, chief global strategist for LPL Financial. "This was unfriendly for equity markets, but markets got the message."
Traders also monitored tensions in the Middle East after Iran's launch of missiles and drones at Israel on Saturday. The CBOE Volatility Index, commonly referred to as the fear gauge, hovered around 19 after popping in the previous session.
Though the Dow ended its losing streak, the down period has zapped much of its year-to-date gain. That is a major reversal considering it approached 40,000 just weeks prior.
The Dow finished Tuesday higher, snapping a six-day losing streak.
The blue-chip index ended 0.2% up, its first positive session of the last seven. The S&P 500 and Nasdaq Composite closed 0.2% and 0.1% lower, respectively.
— Alex Harring
Boeing shares could snap a historic losing streak.
Shares fell for 11 consecutive trading days as of Monday's close, making it tied for the stock's longest streak of losses. But the stock is up around 1% Tuesday, putting it on pace to break its downward trend.
Shares have declined more than 12% in April alone and are down around 35% year to date.
— Hakyung Kim
Shares of Planet Fitness were nearly 4% lower on Tuesday after the company announced Colleen Keating would assume the CEO role effective June 10.
Keating comes to Planet Fitness after serving as chief executive of FirstKey Homes since 2020. Planet Fitness' current interim CEO, Craig Benson, will maintain his seat on the board of directors, the company said.
Analysts were upbeat on the decision despite shares pulling back, however.
— Brian Evans
Information technology was the top-performing sector in the S&P 500, rising 0.4% due to gains from prominent semiconductor and software stocks.
Super Micro Computer rallied 4.5%, while Salesforce, Nvidia, Advanced Micro Devices and Applied Materials gained about 2% each. Other notable gainers included Adobe, IBM and Lam Research.
Three other sectors held gains during afternoon trading, with the health-care sector last up 0.2%. UnitedHealth was the top gainer in the sector, surging more than 5% on the back of earnings.
— Samantha Subin
Stocks tied to the semiconductor industry outperformed in midday trading, with the VanEck Semiconductor ETF (SMH) climbing 1.1%. Year to date, the exchange-traded fund has advanced more than 25%.
Advanced Micro Devices and Applied Materials were higher by more than 2% each. KLA shares also advanced more than 2%.
— Sarah Min
Real estate and energy were the worst-performing sectors in the S&P 500 during afternoon trading, falling about 1% each.
Occidental Petroleum and APA Corporation were the biggest laggards in the energy sector, shedding more than 2% each. Halliburton, Marathon Petroleum and Valero Energy declined at least 1.5%.
American Tower Corporation was the worst performer within real estate, falling 2.3%. CBRE Group, Kimco Realty and Healthpeak Properties lost at least 1.5%.
— Samantha Subin
Federal Reserve Chair Jerome Powell said Tuesday that interest rates could need to stay higher for longer as the battle to bat down inflation continues.
Powell said during a panel that there had been little progress on bringing down price growth this year. Due to this, he said monetary policy could need to remain in place.
"More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal," the Fed chief said.
"The recent data have clearly not given us greater confidence, and instead indicate that it's likely to take longer than expected to achieve that confidence," he said. "That said, we think policy is well-positioned to handle the risks that we face."
— Alex Harring, Jeff Cox
Trump Media shares dropped more than 10% Tuesday, extending losses from the prior session when DJT shares closed more than 18% lower. The latest move comes after the company announced its Truth Social platform will launch a live TV streaming platform.
Trump Media's majority shareholder is former President Donald Trump, who holds nearly 60% of its stock. Trump is in court in New York for jury selection in his criminal hush money case.
— Dan Mangan, Sarah Min
These are some of the companies making headlines in midday trading.
See the full list here.
— Brian Evans
Iran's weekend air assault on Israel has raised the risk in the Middle East over the long term, said Tom Donilon, national security advisor during the Obama administration.
Crude oil prices have fallen over the past two trading sessions, as fears of a wider war have eased after Israel and its U.S.-led allies successfully repelled the attack. But Donilon said the current cycle of conflict is not yet over as Israel will likely respond to the strike.
Iran is now prepared to respond directly, in many cases from its own territory, to any attack from Israel on any Iranian interest or person, said Donilon, who is also chairman of the BlackRock Investment Institute.
"Long term, it is a structural increase in the risk profile," said Donilon. The former national security advisor said he is increasingly worried about the risk of terrorist attacks in the West as the Israel-Hamas war drags on.
"The longer this goes on, I am becoming increasingly concerned about knock-on effects in terms of terrorism here in the United States, especially in Europe," Donilon said. The number of potential threats and plots that were foiled, particularly against Jewish institutions, are very high, he said.
Donilon's comments were interrupted by protestors who called for Columbia to divest from fossil fuels.
— Spencer Kimball
April showers are evident in the market this year.
The three major indexes have pulled back this month, on track for their worst performances since at least the new year began.
The S&P 500 and Nasdaq Composite have both slipped more than 3%. That would mark the worst monthly performances for each going back to September 2023.
The Dow has lagged, tumbling more than 5% thus far in 2024's fourth month. If that holds, it will be the biggest loss in a month since September 2022.
— Alex Harring
Power demand is growing at a pace not seen since the 1980s due to the onshoring of battery and chip manufacturing in the U.S., according to Duke Energy CEO Lynn Good.
"We are seeing demand at a pace that we have not seen probably since the '80s or '90s in the Carolinas," Good said at the Columbia Global Energy Summit on Tuesday. The CEO said demand is expected to grow 1.5% to 2% or more in the near term, compared to flat growth in the past.
"Over the last 18 months, the expansion of demand has expanded far beyond electrification," Good said. The growing number of domestic chip and battery manufacturers as well as data centers supporting artificial intelligence require power around the clock, the CEO said.
Duke is targeting 30,000 megawatts of renewables and 10,000 megawatts of batteries across its system by 2035, Good said. But natural gas will also play an important role in meeting the growing power demand until hydrogen and new nuclear technologies are commercialized, Good said. Gas has helped Duke reduce carbon dioxide emissions by 45% since 2005 as coal is phased out, she said.
"We need a bridge fuel — we used to call it a bridge fuel — we need the fuel to get from here to the future," Good said.
— Spencer Kimball
The iShares U.S. Healthcare Providers ETF rose 1.4% Tuesday morning.
Alignment Healthcare and UnitedHealth Group led the gains, with both stocks rising more than 6%.
The exchange-traded fund remains more than 6% lower for the month.
— Hakyung Kim
The Dow kicked off Tuesday higher, on pace for its first positive session in seven.
The 30-stock index climbed 0.6% shortly after 9:30 a.m. ET. The S&P 500 traded around flat, while the Nasdaq Composite slipped 0.1%.
— Alex Harring
Industrial production rose 0.4% in March, in line with market expectations, though it fell 1.8% for the first quarter of 2024, the Federal Reserve reported Tuesday.
The Fed also said capacity utilization, a measure of total output potential, was at 78.4%, up 0.2 percentage points from February but slightly below the Dow Jones estimate for 78.5%. The measure held below its long-run average of 79.6%.
— Jeff Cox
Federal Reserve Governor Philip Jefferson said Tuesday that he expects inflation to continue to decline as the central bank keeps its restrictive policy in place.
"My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance," Jefferson said in a discussion about how policymaking has changed over the years.
"Of course, the outlook is still quite uncertain, and if incoming data suggest that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer," he added.
Markets currently are pricing in the Fed to stay on hold until September, then slowly begin cutting rates.
— Jeff Cox
Both new construction and permits to build homes missed expectations in March, the U.S. Department of Commerce reported Tuesday.
Privately owned housing starts totaled 1.32 for the month on a seasonally adjusted basis, down 14.7% from February and below the 1.48 million Dow Jones estimate and a 4.3% decline from a year ago. On permits, the total fell 4.3% on a monthly basis to 1.46 million, less than the 1.51 million estimate.
Housing units completed totaled 1.47 million, a 13.5% slide from February.
— Jeff Cox
These are some of the companies making headlines before the bell.
For the full list, read here.
— Pia Singh
Crude oil futures fell for a second day Tuesday as the U.S. expects a limited response from Israel to an unprecedented air assault by Iran, reducing fears that the Middle East is on the verge of a broader regional war.
The West Texas Intermediate contract for May delivery lost 52 cents, or 0.61%, to $84.89 a barrel. The June Brent futures contract fell 49 cents, or 0.54%, to $89.61 a barrel.
Four U.S. officials told NBC News they expect an Israeli response to Iran's attack to be limited in scope and most likely to involve strikes on Iranian forces and their proxies outside Iran.
"Tensions are high, and either party's next moves are hard to predict, but all the significant signs point toward an easing of hostilities and restraint in the short term," said Jorge Leon, senior vice president at Rystad Energy, a consulting firm.
— Spencer Kimball
Morgan Stanley shares popped in Tuesday's premarket as the financial giant's latest earnings report came in ahead of analysts' forecasts.
The bank posted first-quarter earnings of $2.02 per share on $15.14 billion in revenue. It came ahead of consensus estimates from analysts polled by LSEG on both lines, with the group expecting $1.66 in earnings per share and $14.41 billion in revenue.
— Alex Harring