U.S. stocks retreated on Tuesday as investors digested the recent bond market sell-off and braced for the next wave of earnings reports.
The S&P 500 (^GSPC) fell more than 0.5%. The Dow Jones Industrial Average (^DJI) fell more than 120 points, or about 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) fell about 0.6%.
Stocks are coming under pressure from growing doubt that the Federal Reserve will continue to aggressively cut rates – or even hold them steady in November. The strength of the economy, cautious Fedspeak and concerns about the budget impact of an election victory by Republican candidate Donald Trump are factors that play a role.
Amid the uncertainty, the 10-year Treasury yield (^TNX) remained hovering around 4.2% after Monday’s sharp gains helped it rise above that level for the first time since July. Bond sales have negatively impacted interest rate-sensitive stocks such as real estate, with rising yields typically a catalyst for stock falls.
On the earnings front, General Motors (GM) has raised its expectations for the third time this year as positive EV sales contributed to quarterly profit and revenue growth. GM shares rose more than 5%. Elsewhere in earnings, GE Aerospace (GE) fell more than 7% and shares of Verizon fell about 5% on mixed third-quarter reports.
At the same time, expectations are rising for Tesla’s (TSLA) earnings on Wednesday as Wall Street debates whether the “Magnificent Seven” tech megacaps will lead the stock higher on the next leg.
Despite higher yields, gold prices (GC=F) rose, on track to regain Monday’s record high. The gains came as investors sought safety as the US presidential election approaches and tensions continue to rise in the Middle East.
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