Tag Archives: slumps

World

Pakistan Rupee Slumps To Record Low, Crisis-Hit Nation Seeks Bailout

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The Pakistani rupee fell by Rs 24 and was trading at Rs 255 against the US dollar

New Delhi:

Pakistan’s currency today has fallen to a record low of Rs 255 against the US dollar, according to local media reports. The tumble comes after the cash-strapped government relaxed its grip on the exchange rate to win much-needed loans from the International Monetary Fund (IMF).

Pakistan’s money exchange companies removed the limit on the dollar-rupee rate from Wednesday, and said they will let the local currency drop slowly in the open market.

The Pakistani rupee fell by Rs 24 and was trading at Rs 255 against the US dollar at 1 pm, the Express Tribune reported.  

The IMF had asked the Pak government to end its control and let market forces determine the currency rate, a condition that was readily accepted. Pakistan has been looking to win the global body’s approval to get $6.5 billion in funding which is currently stalled.

While Pakistan won an IMF bailout last year, the release of funds has been stalled this year.

The low forex reserve in Pakistan has led to massive food inflation. In some parts of the country, a packet of flour is being sold for as high as Rs 3,000. Videos of people fighting for food and chasing food trucks are doing the rounds on social media.

The country has also plunged into darkness owing to frequent blackouts.

“We haven’t been able to do anything. Everybody is sitting idle. We can’t operate any machines,” says Zafar Ali, who runs a workshop.

Pakistan’s central bank this week also raised interest rates to a 24-year high to fight surging prices.

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Business

Goldman misses profit estimates as dealmaking slumps, consumer business hit

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Jan 17 (Reuters) – Goldman Sachs Group Inc (GS.N) on Tuesday reported a bigger-than-expected 69% drop in fourth-quarter profit as it struggled with a slump in dealmaking, a drop in asset and wealth management revenue and booked losses at its consumer business.

Wall Street banks are making deep cuts to their workforce and streamlining their operations as dealmaking activity, their major source of revenue, stalls on worries over a weakening global economy and rising interest rates.

Goldman is also curbing its consumer banking ambitions as Chief Executive Officer David Solomon refocuses the bank’s resources on strengthening its core businesses such as investment banking and trading.

Solomon confirmed that the bank was cutting 6% of its headcount, or around 3,200 jobs, and was making changes to the consumer business to navigate an uncertain outlook for 2023.

“We tried to do too much too quickly,” he said about the consumer business such as its direct-to-consumer unit Marcus. “We didn’t execute perfectly on some so we’ve taken a hard look at those, and you make adjustments.”

Goldman reported a net loss of $660 million at its platform solutions unit, which houses transaction banking, credit card and financial technology businesses, as provisions for credit losses grew while the business was expanding.

Full-year net loss for the platform solutions business was $1.67 billion, the bank said, even though net revenue of $1.50 billion for 2022 was 135% above 2021.

Goldman on Tuesday confirmed that it is planning to stop making unsecured consumer loans after it moved Marcus into its asset and wealth management arm. The checking account launch for Marcus has also been postponed.

Goldman’s investment banking fees fell 48% in the latest quarter, while revenue from its asset and wealth management unit dropped 27% due to lower revenue from equity and debt investments.

Solomon said the investment banking outlook could be better in the “back half” of 2023, as people are softening their views on the economic outlook for this year.

Shares were down nearly 7% at $347.66 in midday trade.

[1/2] The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly

Reuters Graphics Reuters Graphics

GROWING COSTS

Wall Street’s biggest banks have stockpiled more rainy-day funds to prepare for a possible recession, while showing caution about forecasting income growth in an uncertain economy and as higher rates increase competition for deposits.

Total operating expenses at Goldman rose 11% to $8.1 billion in the quarter. A source told Reuters last week that the bank would lay off 3,000 employees in an attempt to rein in costs.

Goldman Chief Financial Officer Denis Coleman said severance charges will be adjusted in 2023.

The bank reported a profit of $1.19 billion, or $3.32 per share, for the three months ended Dec. 31, missing the Street estimate of $5.48, according to Refinitiv IBES data.

“Widely expected to be awful, Goldman Sachs’ Q4 results were even more miserable than anticipated,” said Octavio Marenzi, CEO of consultancy Opimas.

“The real problem lies in the fact that operating expenses shot up 11% while revenues tumbled. This strongly suggests more cost cutting and layoffs are going to come,” he added.

Goldman’s trading business was a bright spot as it benefited from heightened market volatility, spurred by the Federal Reserve’s quantitative tightening.

Fixed income, currency and commodities trading revenue was up 44% while revenue from equities trading fell 5%.

Overall net revenue was down 16% at $10.6 billion.

Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Saeed Azhar in New York; Additional reporting by Bansari Mayur Kamdar; Editing by Anil D’Silva and Mark Porter

Our Standards: The Thomson Reuters Trust Principles.

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World

Russian rouble slumps around 3% vs dollar as sanctions weigh

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  • This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine

MOSCOW, Dec 27 (Reuters) – The rouble dived around 3% against the dollar on Tuesday, failing to consolidate a recovery from last week’s slide as the market comes to terms with the prospect of lower export revenue in the wake of restrictions on Russian oil.

The rouble lost about 8% against the dollar last week and is on course for a hefty monthly decline after an oil embargo and price cap came into force. The finance ministry has said the recent slump was related to recovering imports.

By 1519 GMT the rouble was 3% weaker against the dollar at 71.36 , heading back towards the almost eight-month low of 72.6325 struck last week.

“At the end of December, the rouble is likely to remain extremely volatile as the market will need to find a new equilibrium under changed trade flows and increased sanctions pressure,” BCS World of Investments said in a note.

“This week, the rouble is expected to fluctuate in the range of 68-71 (per dollar).”

Against the euro, the rouble lost 3.4% to 76.03 . Against the yuan, it was down 3.3% at 10.09 .

The rouble just about remains the world’s best-performing major currency against the dollar this year, supported by capital controls and reduced imports.

Now, with exports and revenues falling, a weaker rouble is more beneficial, First Deputy Prime Minister Andrei Belousov said on Tuesday.

“The strong rouble has played its role,” Belousov said. “In these conditions … it would be good to have a rouble rate of 70-80 per dollar.”

Brent crude oil , a global benchmark for Russia’s main export, was up 1% at $84.8 a barrel while Russian stock indexes were mixed.

The dollar-denominated RTS index (.IRTS) was down 2.9% at 948.8 points. The rouble-based MOEX Russian index (.IMOEX) was 0.5% higher at 2,148.8 points after earlier touching its highest in nearly two weeks.

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Reporting by Alexander Marrow;
Editing by David Goodman and Emelia Sithole-Matarise

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Business

Micron to Cut 10% of Workforce as Demand for Computer Chips Slumps

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(Bloomberg) — Micron Technology Inc., the largest US maker of memory chips, said the worst industry glut in more than a decade will make it difficult to return to profitability in 2023.

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The company on Wednesday announced a host of cost-cutting measures, including a 10% workforce reduction, aimed at helping it weather a rapid drop in revenue. Micron also projected a steep sales decline and a wider loss than analysts had estimated for the current quarter.

Semiconductor makers are in the midst of plummeting demand for their products less than a year after being unable to produce enough to meet orders. Consumers have shelved purchases of personal computers and smartphones amid rising inflation and an uncertain economy. Makers of those devices, the main buyers of memory chips, are now stuck with stockpiles of components and are slowing orders for new stock.

The industry is experiencing its worst imbalance between supply and demand in 13 years, according to Micron Chief Executive Officer Sanjay Mehrotra. Inventory should peak in the current period, then decline, he said. Customers will move to more healthy inventory levels by about the middle of 2023, and the chipmaker’s revenue will improve in the second half of the year, Mehrotra said.

“Profitability will be challenged throughout 2023 because of the oversupply that exists in the industry,” he said in an interview. “The rate and pace of the recovery in terms of profitability depends on how fast supply is brought into line.”

Mehrotra said a unique convergence of circumstances — the war in Ukraine, a surge in inflation, Covid and supply disruptions — has thrust the memory chip industry into a repeat of past cycles when prices plummeted and wiped out profits. Micron has responded aggressively to try to quickly get through the difficult period. One the downturn is over, the industry will resume profitable growth helped by demand for artificial intelligence computing and automation of various industries, he said.

Micron, which had already announced factory output reductions, is cutting its budget for new plants and equipment, and now expects to spend from $7 billion to $7.5 billion for the fiscal year, a decline from an earlier target of as much as $12 billion. The company is slowing the introduction of more advanced manufacturing techniques and predicts that spending on new production will fall throughout the industry.

Unlike other parts of the chip sector, products from Micron are built to industry standards, meaning they can be swapped out for those of its competitors. Because memory can be traded like a commodity, its makers are exposed to more pronounced price swings.

Micron’s pledge to reduce output from its factories and slow expansion projects won’t ease the glut of chips available unless rivals, including Samsung Electronics Co. and SK Hynix Inc., follow suit. That step can help support prices but comes with the penalty of running expensive plants at less than full capacity, something that can weigh heavily on profitability.

In addition to its planned workforce reductions, the company has suspended share repurchases, is cutting executive salaries and will skip companywide bonus payments, executives said on a conference call after its results were released.

Micron said sales will be about $3.8 billion in the fiscal second quarter. That compares with analysts’ average estimate of $3.88 billion, according to data compiled by Bloomberg. The company projected a loss of about 62 cents a share, excluding certain items, in the period ending in February, compared with a loss of 29 cents expected by analysts.

In the three months ended Dec. 1, Micron’s revenue declined 47% to $4.09 billion. The company had a loss of 4 cents a share, excluding certain items. That compares with an average estimate of a loss of 1 cent a share on sales of $4.13 billion.

Micron’s shares declined about 2% in extended trading after closing at $51.19 in New York. The stock has dropped 45% this year, a worst decline than most chip-related equities. The Philadelphia Stock Exchange Semiconductor Index is down 33% in 2022.

Last month the company warned it was cutting production by about 20% “in response to market conditions.” Boise, Idaho-based Micron had 48,000 employees as of Sept. 1, according to filings.

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Business

Wall Street slumps on further recession talk, S&P posts 4th decline

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  • Meta falls on report of EU concern over targeted ads
  • Energy stocks drop as crude trades at lowest level since Jan
  • Mirati slumps after trial data disappoints

Dec 6 (Reuters) – Wall Street closed lower on Tuesday, with the S&P 500 declining for the fourth straight session, as skittish investors fretted over Federal Reserve rate hikes and further talk of a looming recession.

Among the biggest drags on the S&P was Meta Platforms Inc (META.O), which slid following reports that European Union regulators have ruled the company should not require users to agree to personalized ads based on their digital activity.

However, technology names generally suffered as investors applied caution toward high-growth companies whose performance would be sluggish in a challenging economy. This hit Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Alphabet Inc (GOOGL.O) and sent the tech-heavy Nasdaq down for a third straight session.

Most of the 11 major S&P sectors were lower, with energy and communications services (.SPLRCL) joining technology (.SPLRCT) as leading laggards. Utilities (.SPLRCU), a defensive sector often preferred during times of economic uncertainty, fared better.

Future economic growth prospects were in focus on Tuesday following comments from financial titans pointing toward uncertain times ahead.

Bank of America Corp’s chief executive predicted three quarters of mild negative growth next year, while JPMorgan Chase and Co’s (JPM.N) CEO Jamie Dimon said inflation will erode consumer spending power and that a mild to more pronounced recession was likely ahead.

Their comments came on the heels of recent views from BlackRock and others that believe the U.S. Federal Reserve’s aggressive monetary tightening to combat stubbornly high price rises could induce an economic downturn in 2023.

“The market is very reactive right now,” said David Sadkin, president at Bel Air Investment Advisors.

He noted that, while markets traditionally reflect the future, right now they are moving up and down based on the latest headlines.

Fears about economic growth come amid a re-evaluation by traders of what path future interest rate hikes will take, following strong data on jobs and the services sector in recent days.

Money market bets are pointing to a 91% chance that the U.S. central bank might raise rates by 50 basis points at its Dec. 13-14 policy meeting, with rates expected to peak at 4.98% in May 2023, up from 4.92% estimated on Monday before service-sector data was released.

The S&P 500 rallied 13.8% in October and November on hopes of smaller rate hikes and better-than-expected earnings, although the expectation for slower rate hikes could be undermined by further data releases, including producer prices due out on Friday.

“The market got ahead of itself at the end of November, but then we got some good economic data, so people are re-evaluating what the Fed is going to do next week,” said Bel Air’s Sadkin.

According to preliminary data, the S&P 500 (.SPX) lost 57.05 points, or 1.43%, to end at 3,941.79 points, while the Nasdaq Composite (.IXIC) lost 225.01 points, or 1.99%, to 11,014.93. The Dow Jones Industrial Average (.DJI) fell 347.49 points, or 1.02%, to 33,599.61.

Jitters on the direction of global growth have also weighed on oil prices, with U.S. crude slipping to levels last seen in January, before Russia’s invasion of Ukraine disrupted supply markets. The energy sector (.SPNY) fell on Tuesday.

Banks are among the most sensitive stocks to an economic downturn, as they potentially face negative effects from bad loans or slowing loan growth. The S&P banks index (.SPXBK) was down, with Bank of America a leading decliner.

Elsewhere, Mirati Therapeutics Inc (MRTX.O) slumped after the company reported disappointing early trial data on its experimental cancer drug adagrasib.

Textron Inc (TXT.N) climbed after the U.S. Army awarded the contract for its next-generation helicopter to the company’s Bell unit.

Reporting by Devik Jain, Ankika Biswas and Johann M Cherian in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

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Business

Bond yields higher following market slumps, job data

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U.S. Treasury yields traded higher on Tuesday as investors digested Monday’s market retreat and the previous week’s data releases that will guide the Federal Reserve’s policymaking.

The yield on the benchmark 10-year Treasury note rose 6 basis points, trading at 3.9531% at around 5:30 a.m. ET. The yield on the 30-year Treasury bond climbed 7 basis points to 3.9173%. Yields move inversely to prices, and a basis point is equal to 0.01%.

The yield on the 2-year Treasury, the part of the curve most sensitive to Fed policy, was up by 2 basis points to 4.3329%.

The retreat from U.S. bonds appears to be picking up pace as commercial banks, pension funds and foreign governments step away, and the Fed increases the pace at which it plans to sell treasuries from its balance sheet. U.K. bonds are also seeing a dramatic slump as the Bank of England’s emergency move to purchase more gilts failed to calm markets.

Investors will be looking out for the data release on the NFIB (National Federation of Independent Business) Small Business Optimism Index on Tuesday, after the previous week’s release showed an unexpected decline in job openings, slower job growth than forecast and a lower-than-predicted unemployment rate.

The previously released data suggested a continued path of rate hiking for the Fed, which has contributed to recent days’ slides in the stock market.

The New York Fed will release its Survey of Consumer Expectations, which provides a look into consumer’s expectations for overall inflation and prices of food, housing and energy, as well as outlooks on earnings and jobs.

13-week and 26-week bonds are also due for auction Tuesday.

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Business

European markets open to close; sterling slumps against the dollar

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Brent crude slides below $85 a barrel as dollar surges

Brent crude fell below $85 a barrel Monday, as recession fears mount and the U.S. dollar surged.

Brent futures for November settlement were trading down over 1% around $84.92 at 8 a.m. London time. West Texas Intermediate futures also fell to trade around $77.93.

Central banks around the world — including the U.S. and the U.K. — continue to hike interest rates in an effort to tackle inflation.

You can read the full story on CNBC here.

— Hannah Ward-Glenton

Stocks on the move: Belimo up 7%, K+S down 8%

Shares of Swiss heating and ventilation manufacturer Belimo Holding climbed more than 7% in early trade after Berenberg upgraded the stock to “buy” and increased its price target, citing rising demand for home renovation.

At the bottom of the Stoxx 600, German chemical company K+S fell 8%.

– Elliot Smith

Giorgia Meloni and her far-right Brothers of Italy party top vote in Italian elections, exit poll shows

Giorgia Meloni seen speaking during the campaign. Giorgia Meloni, leader of the right nationalist and conservative party Brothers of Italy (Fratelli dItalia, FDI) held the conclusive electoral rally at Arenile, in the left-oriented district of Bagnoli, Naples.

Sopa Images | Lightrocket | Getty Images

Italians are on course to elect the country’s first female prime minister and the first government led by the far-right since the end of World War II.

Giorgia Meloni’s Fratelli d’Italia (Brothers of Italy) party are set to gain 26.4% of the vote, according to an exit poll early Monday morning. The party is in a broad right-wing coalition with Lega, under Matteo Salvini, Silvio Berlusconi’s Forza Italia and a more minor coalition partner, Noi Moderati.

This alliance is set to win 44.43% of the vote, according to exit polls, enough to gain a parliamentary majority with the center-left bloc on 26.57%. Early projections from the actual election results are due Monday morning.

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Sterling hits record low against the dollar, as Asia-Pacific currencies also weaken

CNBC Pro: Morningstar reveals its top high-dividend global stocks — and gives three 30% upside

Morningstar has revealed its pick of global stocks with the highest dividend yields, saying they stand out in an environment where many companies may not be able to maintain their dividends due to “economic strain.”

Pro subscribers can read more here.

— Ganesh Rao

CNBC Pro: Dan Niles predicts when the S&P 500 might bottom, and reveals how he’s profited this year

Stocks prepare to test their lows in the final week of trading for September

Heading into the final week of trading for September, the Dow and S&P 500 are each down about 6% for the month, while the Nasdaq has lost 8%.

Both the Dow and S&P are now sitting 1.2% and 1.6%, respectively, above their lows from mid-June. The Nasdaq is 2.9% above its low.

European markets: Here are the opening calls

European stocks are expected to open in negative territory on Wednesday as investors react to the latest U.S. inflation data.

The U.K.’s FTSE index is expected to open 47 points lower at 7,341, Germany’s DAX 86 points lower at 13,106, France’s CAC 40 down 28 points and Italy’s FTSE MIB 132 points lower at 22,010, according to data from IG.

Global markets have pulled back following a higher-than-expected U.S. consumer price index report for August which showed prices rose by 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported Tuesday, defying economist expectations that headline inflation would fall 0.1% month-on-month.

Core CPI, which excludes volatile food and energy costs, climbed 0.6% from July and 6.3% from August 2021.

U.K. inflation figures for August are due and euro zone industrial production for July will be published.

— Holly Ellyatt

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Business

Home prices plunging in ‘pandemic boomtowns’ as market slumps

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Homeowners in markets that boomed when the real estate sector was red-hot during the COVID-19 pandemic are now forced to slash prices due to dwindling demand, according to data released Monday by Redfin.

Across the US, 21% of home sellers dropped their asking prices in July – the highest share since Redfin began tracking the metric in 2012, according to the firm. The shares of homes with price drops in July compared to one year ago increased in 94 of 97 metro areas surveyed.

The trend was at its worst in “pandemic home-buying boomtowns” such as Boise, Idaho, where a whopping 69.7% of homes for sale slashed listing prices in July. Other overheated markets included Denver, with a 58% of price drops, and Salt Lake City, with a 54.8% share of cuts.

“Individual home sellers and builders were both quick to drop their prices early this summer, mostly because they had unrealistic expectations of both price and timelines,” Boise-based Redfin agent Shauna Pendleton said.

“They priced too high because their neighbor’s home sold for an exorbitant price a few months ago, and expected to receive multiple offers the first weekend because they heard stories about that happening,” Pendleton added.

Salt Lake City is among the most overheated markets.
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The US housing market has cooled considerably in recent months as the Federal Reserve tightens monetary policy to address rampant inflation. Mortgage rates have surged above 5%, nearly twice as high as they were in January.

The spike in mortgage rates has compounded an affordability crisis for prospective buyers contending with the effects of inflation on their budgets as well as sky-high home prices. The trend has sapped demand and left sellers with little choice but to dial down their expectations.

Other metro areas with a share of home price cuts above 50% included Tacoma, Wash.; Tampa, Fla.; Sacramento, Calif.; Indianapolis, and Phoenix, according to Redfin.

Overall, home sales fell by 19.3% in July compared to one year earlier, Redfin’s data showed. Activity has reached its lowest point since the start of the COVID-19 pandemic. Sales have declined for six straight months.

The housing market is in the midst of a downturn.
Getty Images/iStockphoto

“Some prospective homebuyers were sidelined because they were priced out of the market; others were wary of potential home-value declines in the near future,” the firm said in a release.

As The Post reported, Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said in a note to clients last week that the market’s slump is “still nowhere near the bottom, especially for prices.”

“The bottom is still some way off, given the degree to which demand has been crushed by rising rates; the required monthly mortgage payment for a new purchaser of an existing single-family home is no longer rising, but it was still up by 51% year-over-year in July,” Shepherdson said in a note to clients.

Credit rating agency Fitch has also warned of a looming decline, projecting that prices could eventually fall by up to 15% in the event of major housing slump.

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Business

Oil slumps on fears over economic slowdown, stronger dollar

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Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian

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  • Dollar hits 5-wk high on hawkish Fed remarks
  • China’s Sichuan extends power curbs on heatwave -Caixin
  • China cuts lending benchmarks to revive faltering economy
  • Western leaders discuss Iran nuclear deal

LONDON, Aug 22 (Reuters) – Oil prices slumped on Monday as investors were concerned that aggressive U.S. interest rate hikes might weaken the global economy and fuel demand while a stronger dollar also weighed.

Brent crude futures for October settlement fell $1.60, or 1.6%, to $95.12 a barrel by 0900 GMT.

U.S. West Texas Intermediate (WTI) crude futures for September delivery, due to expire on Monday, were down $1.56, or 1.7%, at $89.21 a barrel.

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The more active October contract was at $88.92, down $1.52, or 1.7%.

On Friday both Brent and WTI climbed for a third straight day, but fell about 1.5% on the week on a stronger dollar and demand concerns.

“Growing fears over a global economic slowdown are behind the fall in oil markets,” said Tatsufumi Okoshi, senior economist at Nomura Securities.

“A higher U.S. dollar also prompted fresh selling,” he said. A stronger dollar makes oil more expensive for buyers in other currencies.

The dollar index rose to a five-week high on Monday after Richmond Fed President Thomas Barkin said central bankers were inclined towards faster, front-loaded interest rate increases. read more

Investors will be paying close attention to comments by Fed Chair Jerome Powell when he addresses an annual global central banking conference in Jackson Hole, Wyoming, on Friday.

read more

Prices also fell on worries over slowing fuel demand in China, the world’s largest oil importer, in part due to a power crunch in the southwest caused by a heatwave.

The province of Sichuan will extend curbs on industrial power consumers until Aug. 25 as it tries to deal with dwindling hydropower output and surging household electricity demand, financial news service Caixin said. read more

In a sign of overall concern about the Chinese economy, Beijing cut its benchmark lending rate and lowered the mortgage reference by a bigger margin on Monday, adding to easing measures announced last week, to revive an economy hobbled by a property crisis and a resurgence of COVID cases. read more

Meanwhile, the leaders of the United States, Britain, France and Germany discussed efforts to revive the 2015 Iran nuclear deal, the White House said on Sunday, which could unleash sanctioned Iranian oil onto markets. read more

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Additional reporting by Yuka Obayashi; editing by Christian Schmollinger and Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

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Business

Dow drops nearly 600 points, Nasdaq slumps ahead of megacap tech earnings

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U.S. stocks were trading sharply lower Tuesday afternoon, failing to build on the previous session’s bounce, as investors sift through a raft of company results and await earnings reports due after the bell from tech giants including Microsoft Corp. and Google parent Alphabet Inc.

How are stock indexes performing?
  • The Dow Jones Industrial Average
    DJIA,
    -2.14%
    dropped 589 points, or 1.7%, to 33, 460.
  • The S&P 500
    SPX,
    -2.47%
    fell 83 points, or about 2%, to 4,212.
  • The Nasdaq Composite
    COMP,
    -3.51%
    lost 375 points, or 2.9%, to trade at about 12,630.

Monday saw the biggest intraday reversal since February for the Dow, which rose 238 points, or 0.7%, erasing a loss of nearly 500 points. The S&P 500 rose 0.6%, and the Nasdaq Composite gained 1.3%.

Also read: U.S. stocks ended a Manic Monday in the green — but intraday bounces like this aren’t bullish

What’s driving markets?

Stocks were sinking Tuesday afternoon, with all three major benchmarks down after Monday’s rally.

“Investors are not necessarily secure” in the strength of the market, with “fragility” on display since the beginning of the year, said Aoifinn Devitt, chief investment officer at Moneta, in a phone interview Tuesday. “There is this fear of slowing growth.” 

The CBOE Volatility Index
VIX,
+14.62%
jumped about 15% to around 31 Tuesday afternoon, according to FactSet data. That compares with a 200-day moving average of around 21.

Consumer discretionary
SP500.25,
-4.08%,
information technology
SP500.45,
-2.79%
and communication services
SP500.50,
-2.00%
were the hardest hit sectors of the S&P 500 in early afternoon trading Tuesday, according to FactSet data. Tech and communications services had posted the strongest performance for the S&P 500 in Monday’s stock market rally.

“Now we have this giveback today,” said Devitt. “Markets are trying to figure out a level.”

The S&P 500 is trading not far off its closing low this year of 4,170.70 on March 8, according to Dow Jones Market Data. The Nasdaq was trading near its 2022 low of 12,581.22, hit March 14.

U.S. stocks were falling as investors wade further into the busiest week of the U.S. company-earnings reporting season, digesting results from a number of corporate heavyweights released before the opening bell. They’re also looking ahead to results from megacap tech companies Microsoft Corp.
MSFT,
-3.23%
and Google parent Alphabet Inc.
GOOG,
-2.58%
after the closing bell.

Tech giants are “big movers in the market,” said Paul Nolte, a portfolio manager at Kingsview Investment Management, by phone Tuesday. Both the S&P 500 and Nasdaq are “dramatically impacted by tech.” 

Formerly high-flying Netflix
NFLX,
-4.49%
shares have dropped more than 40% since announcing last week that it had lost 200,000 subscribers in the first quarter.

While around 80% of companies so far reporting earnings for the quarter have beaten profit expectations, including General Electric Co., United Parcel Service Inc. and Pepsico Inc., disappointing earnings forecasts are weighing on shares.

Read: First major Wall Street bank to call for a recession now sees clear outside risk it could be `more severe’

In U.S. economic data, orders at U.S. factories for durable goods rose 0.8% in March and business investment rebounded after the first decline in a year, signaling the economy is still growing at a steady pace. The rise in durable-goods orders matched the consensus expectation produced by a survey of economists by The Wall Street Journal.

 A survey of consumer confidence dipped in April to 107.3 from 107.6, but Americans signaled they are optimistic enough about the economy to keep buying big-ticket items such as news cars and appliances.

The S&P CoreLogic Case-Shiller 20-city house price index posted a 20.2% year-over-year gain in February, up markedly from 18.9% the previous month, but U.S. new-home sales decreased 8.6% to an annual rate of 763,000 in March, the government said Tuesday. 

The Federal Reserve’s policy meeting next week is meanwhile weighing on investors, who are anticipating the central bank may announce a large rate hike, potentially of 50 basis points, in an effort to tame hot inflation, according to Nolte.

“The Fed will raise rates until something breaks, and that will be the economy,” he said. “Concerns may be rising for the potential for a recession.”

Which companies are in focus?
  • Twitter Inc.
    TWTR,
    -3.28%
    shares fell about 2.7% Tuesday to around $50 after its board agreed Monday to accept Tesla chief Elon Musk’s $54.20 a share bid for the social-media platform.
  • 3M Co.
    MMM,
    -3.00%
    shares dropped 2.8% after the maker of post-it notes and industrial equipment posted better-than-expected first-quarter earnings.
  • Shares of PepsiCo Inc.
    PEP,
    -0.06%
    rose 0.3% after delivering earnings and revenue that exceeded Wall Street forecasts.
  • United Parcel Service Inc.
    UPS,
    -3.02%
    shares fell 2.6% after the package-delivery giant reported first-quarter profit and revenue that beat expectations.
  • General Electric Co.
    GE,
    -10.91%
    shares plunged 10.6% after the industrial conglomerate reported first-quarter adjusted profit and revenue that beat expectations, but missed on free cash flow and provided a somewhat downbeat outlook.
  • Shares of JetBlue Airways Corp.
    JBLU,
    -10.60%
    plummeted 10.1% after the air carrier reported a narrower-than-expected loss and revenue that more than doubled to match forecasts, but said it planned to reduce capacity growth further to help restore operational reliability. United Airlines Holdings Inc.
    UAL,
    -4.22%
    said Tuesday it is launching the biggest transatlantic expansion in its history with 30 new or resumed flights coming from mid-April through early June. United Airline shares fell 3.5%.
How are other assets are faring?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    2.774%
    fell about 5 basis points to around 2.77%. Yields and debt prices move opposite each other.
  • The ICE U.S. Dollar Index
    DXY,
    +0.56%,
    a measure of the currency against a basket of six major rivals, rose 0.5%.
  • Bitcoin
    BTCUSD,
    -4.79%
    fell 4.6% to trade around $38,314.
  • Oil futures
    CL.1,
    +3.01%
    climbed, with West Texas Intermediate crude for June
    CLM22,
    +3.01%
    delivery rising 2.8% to trade around $101.37 a barrel.
  • In gold futures
    GC00,
    +0.11%,
    gold for June delivery
    GCM22,
    +0.11%
    rose 0.1% to trade at $1,898.10 an ounce.
  • In European equities, the Stoxx Europe 600
    SXXP,
    -0.90%
    closed 0.9% lower, while London’s FTSE 100
    UKX,
    +0.08%
    gained 0.1%.
  • In Asia, the Shanghai Composite
    SHCOMP,
    -1.44%
    fell 1.4%, while the Hang Seng Index
    HSI,
    +0.33%
    rose 0.3% in Hong Kong and Japan’s Nikkei 225
    NIK,
    +0.41%
    gained 0.4%.

—Steve Goldstein contributed to this report.

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