Stocks on Wall Street experienced a decline today, retracing some of the substantial gains made in the previous session. Early trading saw the S&P 500 down by 0.5%, following its strongest performance in almost two months. The Dow Jones Industrial Average also dipped by 0.6%, a decrease of 240 points, while the Nasdaq composite saw a 0.6% decline.
Eversource Energy faced a significant setback, plummeting by 5.9%, marking one of the most considerable losses in the S&P 500. The company revealed potential losses of up to $1.6 billion in its year-end 2023 results due to ongoing negotiations regarding the sale of its stake in offshore wind projects, which may be impacted by various challenges leading to a lower valuation.
The technology sector witnessed a reversal, with Microchip Technology sliding by 1% after revising its revenue projections for the end of 2023 downwards. The company cited a “weakening economic environment,” resulting in reduced shipments as customers and distributors withdrew from inventories.
Unity Software also faced challenges, registering a 3.8% decline as it announced a workforce reduction of approximately 25%, equivalent to 1,800 positions.
Boeing continued to face a decline, albeit less severe than Monday’s drop, following an in-flight incident with one of its jets. The stock was down by 1.9%, compared to an 8% plunge on the first trading day after the incident. Spirit AeroSystems, a Boeing supplier, fell by 1.4%.
JetBlue Airways experienced a 6% loss after its CEO, Robin Hayes, disclosed his departure for health reasons. Joanna Geraghty, the current president of JetBlue, will assume the role, becoming the first woman to lead a major U.S. airline.
The financial markets have witnessed a sluggish start to the year, after a robust finish in 2023. The S&P 500 enjoyed nine consecutive weeks of gains to close out the year, driven by optimism about the resilience of the U.S. economy and expectations of significant interest rate cuts by the Federal Reserve through 2024.
However, recent mixed data has fueled skepticism about Wall Street’s optimism regarding the number of anticipated rate cuts. The Federal Reserve, in an effort to control inflation, has already increased its main interest rate to the highest level since 2001.
Traders are still placing bets on more than a 50% probability of at least six rate cuts, double the Fed’s projection, as per data from CME Group. Critics argue that such a high number is improbable unless the economy enters a recession.
Anticipation of rate cuts has already led to a decline in Treasury yields, which held relatively steady on Tuesday, with the 10-year Treasury yield at 4.01%.
In the oil market, crude prices rebounded slightly from previous losses attributed to Saudi Arabia’s indications of weakening demand. Benchmark U.S. crude rose by 1.2% to $71.59 per barrel, while Brent crude, the international standard, gained 1.4% to reach $77.22.
The upcoming key events for Wall Street this week include the U.S. government’s monthly update on consumer-level inflation on Thursday and the beginning of S&P 500 companies reporting their Q4 2023 results on Friday. Expectations are for modest earnings per share growth compared to the same period in the previous year.
In international stock markets, Japan’s Nikkei 225 rose by 1.2%, achieving its highest close since 1990. Other global indexes experienced more modest movements, with many showing slight declines.
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