The stock market's September swoon continued Tuesday as Wall Street remained focused on the increased likelihood that the Federal Reserve won't cut interest rates anytime soon.
The S&P 500 (^GSPC) pulled back 1.5%, while the Dow Jones Industrial Average (^DJI) dropped nearly 400 points, or 1.2%. The tech-heavy Nasdaq Composite (^IXIC) was down 1.6%. While the three major stock gauges started the week with wins, they are on track for a losing month.
Fed policymaker Neel Kashkari said that given the surprising resilience of the US economy, the central bank will probably need to hike rates again and keep them high to cool inflation — echoing recent comments from other officials.
The prospect of "higher for longer" interest rates has put pressure on markets. The 10-year Treasury yield (^TNX) was hovering near its highest levels since 2007, which helped push the dollar to a new 10-month peak. At the market close, the 10-year Treasury yield hovered around 4.55%.
With recession worries still in play, JPMorgan CEO Jamie Dimon warned markets may not be prepared for a worst-case scenario where the Fed lifts rates to 7% alongside stagflation.
Adding to the gloom was a warning from Moody's that a government shutdown would harm the US credit rating. With just days to go before the Sept. 30 deadline for reaching a budget deal, history shows the standoff could rattle stocks.
Stocks slide as Dow posts worst day since March
Stock losses accelerated throughout the afternoon on Tuesday as fears of higher interest rates for longer than initially expected, shrinking consumer confidence and a looming government shutdown weighed on investor sentiment.
The S&P 500 (^GSPC) pulled back 1.5%, while the Dow Jones Industrial Average (^DJI) dropped nearly 400 points, or 1.1%. The tech-heavy Nasdaq Composite (^IXIC) was down nearly 1.6%. The 10-year Treasury yield (^TNX) was hovering near its highest levels since 2007, which helped push the dollar to a new 10-month peak. The 10-year Treasury yield hovered around 4.56%.
Target closes 9 stores due to retail theft
On Tuesday the big box retailer announced plans to close nine stores, effective Oct. 21.
"We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance," the company said in a statement.
The stores set to close include one in Harlem, New York; two in Seattle, Washington; three near San Francisco and Oakland, California; and three in Portland, Oregon. All "eligible" employees will be offered the opportunity to transfer to other Target locations, the company said.
The decision to close stores came after the company reported that inventory shrinkage — mostly the theft of merchandise — would cut profits by $500 million this year. In 2022, profits took a $700 million hit from inventory shrinkage.
"Shrink in the second quarter remained consistent with our expectations but well above the sustainable level where we expect to operate over time," Target CEO Brian Cornell said in the company's second quarter earnings call.
Target added it "invested heavily in strategies to prevent and stop theft and organized retail crime in our stores" prior to closing stores, including by adding more security to stores, using third-party security guard services, and implementing "theft-deterrent" tools across our business.
Biden visits UAW picket line
President Joe Biden spoke with strikers at United Auto Workers (UAW) picket lines in Michigan on Tuesday.
A momentous day for the United Auto Workers (UAW) union and its ongoing strike with the Big Three as President Biden joined the picket lines in Michigan, just as Ford (F) announced a big update on an upcoming battery plant in the state.
Biden met with UAW picketers at GM's Van Buren Township parts distribution center in Michigan. "Wall Street didn’t build this country, the middle class built this country. The unions built the middle class," Biden said to UAW workers on strike. "Let’s keep going, you deserve what you’ve earned. And you’ve earned a hell of a lot more than you’re getting paid now."
UAW president Shawn Fain joined Biden at the picket line as well, thanking the president for joining the strike, but stopped short of endorsing Biden ahead of the 2024 presidential election.
The White House says Biden’s visit was first time a sitting president has visited a picket line in modern times. The move comes as his Republican rival, former President Trump, indicated he would be visiting the state as well. On Wednesday, Trump is expected to hold a rally with 500 former or current union members in Clinton Township, Mich.
The Big Three — Ford, GM, and Stellantis — put out statements ahead of Biden’s visit, though they did not criticize the president for joining the UAW strikes.
“On the first day of the strike, President Biden said UAW workers ‘deserve a contract that sustains them and the middle class.’ We agree and presented a record offer,” Stellantis (STLA) said on its UAW negotiations website.
GM (GM) also stated that its “focus is not on politics but continues to be on bargaining in good faith” with the UAW to reach an agreement.
Ford also issued the statement on the president’s visit, which notably is where the company’s big Michigan Assembly Plant is located. “Ford and the UAW are going to be the ones to solve this by finding creative solutions to tough issues together at the bargaining table. We have a shared interest in the long-term viability of the domestic auto industry, the industrial Midwest and good-paying manufacturing jobs in the US,” the company said.
Trending tickers in afternoon trade
Electric vehicle makers littered the Yahoo Finance trending tickers page on Tuesday. Fisker (FSR) shares jumped nearly 15% as the company said it expects to reach its goal of delivering 300 vehicles a day later this year. Meanwhile Rivian (RIVN) popped nearly 6% as Baird called next week's Q3 deliveries report a near-term catalyst.
DraftKings (DKNG) stock rose nearly 3% as JPMorgan upgraded shares of the online gambling operator from Neutral to Overweight, noting the stock has lagged too far behind the S&P 500 Index (^SPX) since July amid increased market share gains for DraftKings.
Amazon (AMZN) shares were off almost 3% on the day as the Federal Trade Commission (FTC) and 17 state attorneys general sued Amazon Tuesday, alleging that the e-commerce giant is illegally monopolizing markets.
The FTC comes for big tech again
The Federal Trade Commission and 17 state attorneys general sued Amazon Tuesday, alleging the e-commerce giant is monopolizing markets.
The suit alleges that Amazon holds monopolies in online markets for buyers and sellers. According to the FTC, Amazon is violating U.S. antitrust law by degrading consumer choice and blocking sellers from selling goods at lower prices elsewhere online.
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” FTC Chair Lina Khan said in a statement.
“The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
The FTC claims that Amazon uses anti-discounting measures that hurt sellers and keep other online retailers from offering prices lower than Amazon's. It also says that Amazon's requirement that sellers use its fulfillment service to be able to use its Prime service makes it more expensive for sellers to offer their products on other platforms.
The commission further claims that Amazon replaces organic search results on its market place with paid ads that frustrate consumers, and that the company biases its own products in search.
The suit calls for a permanent injunction against Amazon to keep the company from "engaging in its unlawful conduct and pry loose Amazon's monopolistic control to restore competition."
Amazon, however, refuted those claims.
"The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store," David Zapolsky, Amazon senior vice president of global public policy and general counsel aid in a statement.
"If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do”
Stocks bounce off lows
Stocks fell deeper into the red just before noon on Tuesday before bouncing slightly. Earlier in the day, the latest print on consumer confidence reflected a gloomy outlook for the economy as a potential government shutdown and the prospect of higher interest rates weighed on investor sentiment.
The S&P 500 (^GSPC) pulled back 1%, while the Dow Jones Industrial Average (^DJI) dropped about 270 points, or 0.8%. The tech-heavy Nasdaq Composite (^IXIC) was down about 1.2%. The 10-year Treasury yield (^TNX) was hovering near its highest levels since 2007, which helped push the dollar to a new 10-month peak. Just after noon ET, the 10-year Treasury yield hovered around 4.54%.
Home prices pick up again in July
Home prices hit a new all-time high in July.
The S&P Case-Shiller US National Home Price Index in July increased 0.6% month over month and 1% over the last 12 months, on a seasonally adjusted basis. July’s movement reached a new high for the nationwide home index, surpassing the record set in June 2022.
“U.S. home prices continued to rally in July 2023,” Craig J. Lazzara, managing director at S&P DJI, said in a statement. “The increase in prices that began in January has now erased the earlier [H2 2022] decline, so that July represents a new all-time high for the National Composite.”
The 20-city index — measuring existing home prices in the 20 largest US cities — rose 0.9% monthly in July after seasonal adjustment, exceeding Bloomberg’s survey of economists’ expectations of 0.7%.
“This recovery in home prices is broadly based," Lazzara said. “As was the case last month,10 of the 20 cities in our sample have reached all-time high levels. In July, prices rose in all 20 cities after seasonal adjustment (and in 19 of them before adjustment).”
The 20-city index increased by 0.1% over the last 12 months. For the third straight month, Chicago, Cleveland, and New York reported the highest year-over-year gains among the largest US metropolitans in July, at 4.4%,4%, and 3.8%, respectively.
Consumer confidence declines for second-straight month
Consumer confidence declined again in September, hitting its lowest levels since May, according to new data from the Conference Board released on Tuesday.
The Consumer Confidence Index fell to 103 in September, down from 108.7 in August and below the 105.5 economists surveyed by Bloomberg had expected. Consumers views on the present economic situation remained relatively unchanged, according to Dana Peterson, the chief economist at The Conference Board. But consumers are feeling worse about what's ahead for the economy.
The Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, sank to a reading of 73.7 in September, down from 83.3 in August and 88 in July.
Historically, any number below 80 signals a recession within the next year.
"Consumers may be hearing more bad news about corporate earnings, while job openings are narrowing, and interest rates continue to rise—making big-ticket items more expensive," Peterson said in the release.
Stocks open in the red
Stocks opened lower as fears of higher interest rates for longer than expected, rising treasury yields and a looming government shutdown weighed on investors.
At the opening bell, the S&P 500 (^GSPC) was down 0.7%, while the Dow Jones Industrial Average (^DJI) slipped 0.5%. The Nasdaq Composite (^IXIC) slumped more than 0.7%. The 10-year Treasury yield (^TNX) hovered near its highest levels since 2007, sitting at 4.52% when the market opened on Tuesday.
Coty, Tesla, and Fisker: Stocks trending in premarket trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in premarket trading on Tuesday:
Coty (COTY): Shares fell by 3% after the cosmetics maker launched a global offering of 33 million shares and said it had submitted an application for dual listing of its shares on the Paris Stock Exchange.
Tesla (TSLA): Shares fell 1% in premarket trading. The FT reported Tuesday that Tesla and European carmakers that export from China to the EU will be part of the bloc's probe into whether the country's electric vehicles industry is receiving unfair subsidies.
Fisker (FSR): Fisker’s shares rose by 4%. The group announced on Tuesday that it expects to ramp deliveries of its EVs in the US and Europe to 300 per day.
ASML (ASML): Shares in the chipmaker fell almost 2% premarket amid broader weakness in shares of big technology companies, according to the Wall Street Journal.