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Stock losses accelerate into the close as momentum stalls: Nasdaq drops 3%, Dow sheds nearly 500 points

News Team
US stocks were under pressure Tuesday, with the Nasdaq losing about 3% as selling ramped for technology shares especially. As of the close, the S&P 500 was off 2%, bringing it down to 3,821.74. The Dow fell by 490 points, or 1.6%, and the Nasdaq dropped 2.98% to 11,181.54. The small cap Russell 2000 was also down more than 1.5%. Stocks had taken a leg lower in morning trade after a new report showed US consumer confidence deteriorated to a 16-month low in June amid ongoing inflation concerns, stoking concerns that souring outlooks would contributed to a further slowdown in actual spending and activity. Domestic stocks were briefly buoyed during the pre-market session and at the market open China cut in half its required quarantine times for travelers, in a sign the country may be loosening its most stringent COVID zero policies that had acted as a risk to growth. Stock indexes in Asia and Europe broadly gained. US crude oil prices briefly rose above $111 per barrel, and the 10-year Treasury yield jumped back above 3.25% to approach last week’s highs. US equity investors remain closely attuned to signs of an economic deceleration in the US, with inflation continuing to run at multi-decade highs and monetary policymakers maintaining a firm stance that their priority remains bringing down prices even at the expense of some growth. Closely watched data from the University of Michigan last Friday suggested consumers were at least beginning to temper their expectations for how hot inflation will run in the near-term, however, helping contribute to a stock rally that closed out the S&P 500’s second-best week of 2022. With quarterly corporate earnings season set the pick up in the next few weeks, the focus will soon shift to how companies have been navigating persistent inflation alongside early indications of softening demand. As of Friday, consensus Wall Street strategists were still predicting S&P 500 earnings would grow, in aggregate, by 10.4%, according to FactSet. Some have indicated this estimate will need to be revised down to fully reflect inflation’s impact to margins, and the effects of an otherwise softening economy. Semiconductor bellwether Micron (MU) is set to report earnings later this week, with the pace of the earnings reports set to pick up in mid-July. “I think we’re gonna have a second half that’s frustrating the bulls and frustrating the bears, bouncing around a bunch as we kind of digest the economy slowing,” Bob Doll, Crossmark Global Investments chief investment officer, told Yahoo Finance Live. “How much of an effect does that have on earnings? Maybe we get a little better inflation news so the [price-earnings ratio of the S&P 500] doesn’t get threatened as much. But we’re moving from a period where it’s all been about PEs multiples declining. And we’re moving to a period where I think the earnings are gonna be watched more carefully than the PE.”

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