U.S. stock indexes sagged on Tuesday as rising Treasury yields impacted rate-sensitive sectors, while investors evaluated earnings to assess the health of American companies.
Verizon (VZ.N), opens new tab was the biggest decliner on the blue-chip Dow after the telecom giant missed estimates for third-quarter revenue with a 4.9% loss.
Adding to losses, Dow heavyweight 3M (MMM.N), opens new tab slipped 0.6%, reversing its premarket gains, despite raising the lower end of its full-year adjusted profit forecast.
The Dow Jones Industrial Average (.DJI), opens new tab fell 153.09 points, or 0.36%, to 42,778.51, the S&P 500 (.SPX), opens new tab lost 22.04 points, or 0.38%, to 5,831.94, and the Nasdaq Composite (.IXIC), opens new tab lost 52.19 points, or 0.28%, to 18,487.82.
Pressuring equities, U.S. Treasury yields rose as investors assessed the impact of the upcoming presidential election on fiscal policy. They also waited to gauge the effect of a robust economy on the Federal Reserve's policy trajectory.
The yield on the benchmark 10-year note rose as high as 4.222%, continuing a steady climb since early October, after a bumper jobs report led investors to dial back expectations for the central bank to ease interest rates through the year.
Stocks retreated from record highs on Monday as investors took a breather following six consecutive weeks of advances for major indexes, even as gains in Nvidia helped the Nasdaq edge higher.
"We set all these new highs with a sense of nervousness. That's for three primary reasons: a lot of conflicts around the world at the moment, the Fed and what they're going to do next and the election... (have) people a bit more unsure of what's next," said J.J. Kinahan, CEO, IG Group North America.
The next few weeks are likely to be volatile for equity markets, as investors scrutinize company earnings, fresh economic data and the results of the U.S. election, followed by a central bank meeting.
Traders are pricing in an 89.6% chance of a 25-basis-point interest-rate cut in November, according to CME's FedWatch.
GE Aerospace (GE.N), opens new tab fell 6.3% despite raising its profit forecast for 2024, as persistent supply constraints impacted its revenue, highlighting the difficulty some companies may face in trying to impress investors this year.
Baker Hughes (BKR.O), opens new tab and Texas Instruments (TXN.O), opens new tab are scheduled to report earnings after the bell.
Declining issues outnumbered advancers by a 1.81-to-1 ratio on the NYSE, and by a 1.6-to-1 ratio on the Nasdaq.
The S&P 500 posted five new 52-week highs and two new lows, while the Nasdaq Composite recorded 25 new highs and 25 new lows.
Source: Reuters (Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Pooja Desai and Shounak Dasgupta)