By DAMIAN J. TROISE
Stocks fell in afternoon trading on Wall Street and bond yields jumped Tuesday as investors monitor the latest developments around Russia’s war against Ukraine and prepare for the next round of corporate report cards.
The S&P 500 fell 0.7% as of 12:03 p.m. Eastern. The Dow Jones Industrial Average fell 80 points, or 0.3%, to 34,841 and the Nasdaq fell 1.8%.
Weakness from big technology stocks weighed down the broader market. Companies in the sector, with their pricey valuations, tend to push the market higher or lower more forcefully. Chipmaker Qualcomm fell 4.8%.
Health care and consumer goods companies made solid gains. Insurer UnitedHealth Group rose 2.5% and Procter & Gamble rose 1.3%.
Twitter rose another 4.2% after disclosing an arrangement with Tesla chief Elon Musk that will give him a board seat but also limit how much of the company he can buy while he’s a director. The company had disclosed a day earlier that the mercurial billionaire and Twitter critic had become the company’s largest shareholder.
Carnival rose 4% after the cruise line gave investors an encouraging bookings update. Norwegian Cruise Line rose 1.7% and Royal Caribbean rose 0.7%.
Bond yields rose significantly. The yield on the 10-year Treasury rose to 2.56% from 2.41% late Monday. Bond yields have been rising as investors prepare for a shift in monetary policy from the Federal Reserve. The central bank has already started raising its benchmark interest rate to try and temper inflation’s impact and more hikes are expected throughout the year.
Wall Street is watching closely for any clues as to how sharply interest rates will rise as inflation persists and the conflict in Ukraine adds more uncertainty to inflation’s path ahead. More details could be gleaned Wednesday when the Fed releases minutes from its March interest rate meeting.
Meanwhile, Fed Governor Lael Brainard reaffirmed the central bank’s concerns during a speech in Minneapolis on Tuesday.
“Currently, inflation is much too high and is subject to upside risks,” she said. “The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.”
Investors are currently betting on a more aggressive path forward for the Fed. They are currently giving the Fed a greater than 75% chance that it will raise interest rates more than a half-point in May, according to CME Group. The typical increase is only a quarter-point.
Russia’s war in Ukraine remains a key focus for Wall Street as the potential for stricter economic sanctions increase. The European Union’s executive branch has proposed a ban on coal imports from Russia in what would be the first sanctions targeting the country’s lucrative energy industry over its war in Ukraine.
The Treasury Department will not allow any Russian government debt payments from accounts at U.S. financial institutions to be made in U.S. dollars, restricting one of the strategies President Vladimir Putin is employing to stave off default.
The stricter sanctions follow mounting evidence Russian soldiers deliberately killed civilians during the conflict.
Investors face a mostly quiet week of economic and corporate news. Wall Street is preparing for the next round of corporate earnings in the coming weeks. The results could give a clearer picture of how companies are dealing with the impact from rising inflation.