Bond markets keep pressure on stocks
The US stock market gave back more of its record-setting rally on Tuesday after bond markets rattled by high inflation cranked up the pressure.
The S&P 500 fell 0.7% for its third straight loss since setting its latest all-time high. The Dow Jones Industrial Average dropped 322 points, or 0.6%, and the Nasdaq composite sank 0.8%.
The declines followed mixed moves for stock markets abroad, while oil prices eased in their latest yo-yo move. Falling technology stocks in Asia dragged South Korea's Kospi down 3.3%, but Germany's DAX returned 0.4%.
Tech stocks falter
Tech stocks are faltering following huge runs made because of excitement around artificial-intelligence technology, runs that critics said made them too expensive. The stumble comes as oil prices swing on uncertainty about how long the Iran war will keep the Strait of Hormuz closed for oil tankers. That in turn has pushed yields higher in bond markets, which is dragging on economies and pressuring all kinds of other investments.
The wait is on, meanwhile, for Nvidia to report its latest quarterly results. The chip company is due to report on Wednesday, and it's routinely blown past analysts' expectations each quarter. Not only that, it's provided forecasts for future growth that have consistently topped Wall Street's.
How it does could determine whether technology stocks and the larger US stock market can maintain their rally. Nvidia fell 0.8% Tuesday and was one of the heaviest weights on the S&P 500 because of its immense size.
Treasury yields climb
So far, many big US companies have been reporting stronger-than-expected profits for the latest quarter thanks in part to their customers continuing to spend in the face of high gasoline prices and other challenges. That's helped vault US stock indexes to records, but disquiet in the bond market is threatening that.
In the bond market, Treasury yields climbed further. The yield on the 10-year Treasury rose to 4.66% from 4.61% late Monday and from less than 4% before the war with Iran began. That's a notable increase, and it's part of a worldwide climb that's making stock prices look even more expensive and threatening to slow the economy.
Higher yields can drive up rates for mortgages and loans going to companies to build AI data centres, which has been a big source of growth for the economy.
Oil eases but stays elevated
Yields rose even as oil prices eased. The price for a barrel of Brent crude slipped 0.7% to settle at $US111.28, though it's still well above its $US70 level from before the war with Iran.
The average American price for a gallon of petrol rose again overnight to $US4.53, according to the AAA motor club, or about 43% more than it cost last year at this time.
All told, the S&P 500 fell 49.44 points to 7,353.61. The Dow Jones Industrial Average dropped 322.24 to 49,363.88, and the Nasdaq composite sank 220.02 to 25,870.71.
Standard Chartered cuts roles
Elsewhere, London's FTSE 100 edged up 0.1% despite a 2.2% drop for Standard Chartered. The bank said on Tuesday it plans to reduce over 7,800 roles as it steps up artificial intelligence and automation uses. It's the latest big company to cite AI as one of the reasons for cutting jobs.
The Associated Press
