Traders work on the floor of the New York Stock Exchange during opening bell in New York City on August 21, 2023.
Angela Weiss | AFP | Getty Images
Stock indexes slipped Tuesday as the momentum seen in the previous session fizzled, and declines in bank shares offset gains in tech names.
Several regional and larger bank fell after S&P Global cut credit ratings and revised its outlook for multiple U.S. banks on Monday, citing “tough” operating conditions. The financial sector was recently down 0.8%, making it the worst-performing sector of the S&P 500. KeyCorp and Comerica dropped nearly 4% each. Big bank JPMorgan Chase also fell 2.1%.
Dick’s Sporting Goods and Macy’s fell by 24% and 13%, respectively, on cautious full-year forecasts, also leading the SPDR S&P Retail ETF lower. On the other hand, major tech-related names Netflix and Alphabet climbed.
Tuesday’s moves come as Wall Street keys on the bond market, a day after the benchmark 10-year Treasury yield hit its highest level since 2007. The 10-year yield eased slightly Tuesday to 4.33%
“I think [the market] is kind of wavering right now as the 10-year yield is hovering right around those October highs,” Adam Turnquist, chief technical strategist at LPL Financial said. “We’re watching for an official breakout on the 10-year … I think if we start moving higher, that’s certainly a warning sign for maybe a little bit deeper pullback in equity markets.”
While Turnquist said he is not bearish on stocks, he thinks “we’re in the pullback phase of a bull market.” The strategist named the industrial sector as his top pick.
Crossmark Global Investments’ Victoria Fernandez similarly expects a continuing pullback in the market, which she said will be influenced by climbing yields and a more cautious consumer.
“I think we’re gonna see higher yields bite a little bit,” said Fernandez, the firm’s chief market strategist. “Now that we’re through earnings, it’s the macro story that’s going to be driving a lot of what we see in market volatility, and positive macro stories are really a double-edged sword because all that does is tell the Fed that their financial conditions are not tight enough.”