US stocks fell after a rally earlier this week as investors watched developments over the Russia-Ukraine talks and considered mixed data on the US economy.
The S&P 500 fell. The blue-chip index ended a four-day winning streak as technology stocks plunged, pushing the Nasdaq Composite down 1.2%. The CBOE Volatility Index, or VIX, rose above 20 again after hitting its lowest level in more than two months on Tuesday.
The price of crude oil in the US rose for the first time in three sessions on Wednesday, after falling earlier this week amid signs of progress in talks between Russia and Ukraine. Russia said it was easing military action in the Ukrainian capital Kiev and the northern city of Chernihiv and was willing to organize a meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy following a draft peace agreement. However, on Wednesday, some media reports suggested that strikes were still taking place near both major cities in Ukraine.
Meanwhile, investors nervously watched a flattening yield curve for US Treasuries, with longer-term bond yields falling much more sharply than short-term bond yields, as short-term traders bet on higher Federal Reserve yields and a murky macroeconomic outlook. considered. the longer term. The benchmark 10-year yield rose higher on Wednesday morning to 2.4%.
The spread, or difference, between 2- and 10-year Treasury yields — a closely watched part of the yield curve that has typically inverted ahead of recessions — narrowed earlier this week to its lowest level since 2019. It’s reversed for a few seconds on Tuesday.)
“It’s still a pretty accurate indicator [of a recession] If we go back and look at history, but I have to give you a few caveats,” Kristina Hooper, chief strategist for Invesco’s global market, told Yahoo Finance Live on Tuesday. to be a very accurate indicator. Second, it is a longer-term indicator. So after the yield curve inverts, it takes an average of about 18 months for a recession to occur. And it’s a terrible, terrible sell signal, because stocks typically have room to run and move significantly higher after a yield curve inverts.”
The latest set of economic data from the US presented a mixed picture of the state of the economy amid still high inflation, lingering geopolitical uncertainty and a tightening of the Federal Reserve’s monetary policy. The number of job openings had changed little at around 11.3 million in March, with 6.7 million much better than new hires, reflecting ongoing rampant labor shortages. And while the Conference Board’s latest monthly index showed a slight rise in consumer confidence in March, the index remained below last year’s average. In addition, consumer inflation expectations rose to a record high of 7.9% over the year.
“We expect a marked downward shift in inflation expectations in the second half of the year, but they could easily rise further in the near term,” Ian Shepherdson, chief US economist for Pantheon Macroeconomics, wrote in a note Tuesday.
“The survey sends mixed signals about the state of the economy, but always remember that sentiment is not the same as spending, and that’s what matters,” he added.
4:10 PM ET: Stocks drop to end of 4-day winning streak: S&P 500 is down 0.6%, Nasdaq is down 1.2%
Here are the main moves in the markets as of 4:10 p.m. ET:
S&P500 (^GSPC†: -29.15 (-0.63%) to 4,602.45
dow (^DJI†: -65.38 (-0.19%) to 35.228.81
Nasdaq (^IXIC†: -177.36 (-1.21%) to 14,442.27
rough (CL=F†: +$3.14 (+3.01%) to $107.38 per barrel
Gold (GC=F†: +$21.50 (+1.12%) to $1,939.50 per ounce
10-year treasury (^TNX†: -4.2 fps to yield 2.3580%
11:04 a.m. ET: RH sounds alarm over consumer demand amid Russia-Ukraine conflict, inflation
RH (RH) — the company formerly known as Restoration Hardware — warned of the economic outlook as consumers noted rising inflation and market volatility during the Russia-Ukraine conflict.
“While we enter 2022 confident that our efforts will continue to improve and expand the RH brand in the coming years, we also recognize that several external factors, such as record inflation, rising interest rates and global turmoil, are driving uncertainty.” RH CEO Gary Friedman said during the company’s earnings call. “While first quarter sales and margin remain healthy due to the continued clearing of our backlog, we experienced declining demand in Q1 that coincided with the Russian invasion of Ukraine in late February and the market volatility that followed.”
For the first quarter, the home furnishings company said it expected its net revenue to grow between 7% and 8% from last year, slowing down from the 11% revenue growth it saw for the fiscal fourth quarter. Adjusted operating margin is also expected to shrink on a quarterly basis to between 23% and 23.5%.
Shares of RH fell more than 12% during the day on Wednesday.
9:30 a.m. ET: Stocks Open Lower
Here’s where the markets traded just after the opening bell Wednesday morning:
S&P500 (^GSPC†: -8.17 (-0.18%) to 4,623.43
dow (^DJI†: -40.27 (-0.1%) to 35,259.91
Nasdaq (^IXIC†: -46.91 (-0.32%) to 14,569.93
rough (CL=F†: +$3.53 (+3.39%) to $107.77 per barrel
Gold (GC=F†: +$10.00 (+0.52%) to $1,928.00 per ounce
10-year treasury (^TNX†: +2.8 fps to yield 2.428%
8:31 a.m. ET: 4Q GDP revised to 6.9% yoy, personal consumption to 2.5%
The U.S. economy grew slightly more slowly than previously reported in the closing months of 2021, based on the Bureau of Economic Analysis (BEA)’s final fourth-quarter gross domestic product (GDP) revision.
U.S. GDP rose 6.9% year-on-year in the last three months of 2021, the BEA said on Wednesday. Previously, GDP growth of 7.0% was reported.
The downward revision in aggregate GDP came as the BEA lowered its measure of personal consumption to show a rate of 2.5% in the fourth quarter, significantly lower than the previously posted rate of 3.1%. Consumer spending comprises about two-thirds of US economic activity. Nevertheless, the downward revision was partly offset by an upward revision of investment in private stocks, which also contribute positively to GDP.
8:16 a.m. ET: Private payrolls rose 455,000 in March, slightly higher than estimates: ADP
Private sector employers in the US cut back slightly more jobs than expected in March, as the economy faced persistent labor shortages and widespread job opportunities.
Private sector payrolls are up 455,000 in the past month, ADP said in its latest report on Wednesday. Consensus economists were looking for 450,000 jobs to return, according to data from Bloomberg. In February, employers brought back 486,000 payrolls, based on ADP’s upwardly revised monthly printout.
ADP’s report comes two days before the Labor Department’s “official” monthly jobs report for March, which is also expected to show about half a million payrolls for the past month. While ADP’s report has mostly been an imperfect indicator of the final wage figure in the government’s jobs report, it has often provided at least guidance on underlying trends in job growth.
7:30 a.m. ET: Stock Futures Fall After S&P 500 Gains Four Consecutive Days
Here’s where the markets traded on Wednesday morning:
S&P 500 futures (ES=F†: -10.5 points (-0.23%) to 4,615.00
Dow futures (YM=F†: -77 points (-0.22%) to 35,113.00
Nasdaq futures (NQ = F† -50.25 points (-0.33%) to 15,187.50
rough (CL=F†: +$2.79 (+2.68%) to $107.03 per barrel
Gold (GC=F†: +$10.60 (+0.55%) to $1,928.60 per ounce
10-year treasury (^TNX†: +1.3 fps to yield 2.413%
7:20 a.m. ET: Mortgage applications fall for third straight week as mortgage rates rise fastest in 11 years
US mortgage applications fell for the third consecutive week last week, with refinancing in particular coming under pressure as mortgage rates rose the most in more than a decade.
The Mortgage Bankers Association (MBA) weekly index showed a 6.8% decline in application volume for the week ended March 25. This followed an 8.1% decline in the previous period and coincided with an increase in the 30-year mortgage interest deduction. to 4.8%, from 4.5% earlier. That was the largest weekly increase since 2011 to bring rates to the highest level since the end of 2018.
Refinancings were down 15% compared to the previous week and were down 60% over the same period last year. Unadjusted, week-on-week purchases were still 1% higher, but 10% lower than the same week last year.
Mortgage rates rose to their highest level in more than three years last week as investors continue to price in the impact of a more restrictive monetary policy from the Federal Reserve. Not surprisingly, the volume of refinancing applications has continued to fall as fewer borrowers have an incentive to apply at rates significantly higher than a year ago,” said Mike Fratantoni, MBA senior vice president and senior executive. chief economist, in a press statement.
6:12 PM ET Tuesday: Stock futures open slightly lower
Here are the top stock index futures open Tuesday night:
S&P 500 futures (ES=F†: -4.75 points (-0.1%) to 4,620.75
Dow futures (YM=F†: -24 points (-0.07%) to 35,166.00
Nasdaq futures (NQ = F† -15.5 points (-0.1%) to 15,222.25
NEW YORK, NEW YORK – MARCH 28: Traders work on the floor of the New York Stock Exchange (NYSE) on March 28, 2022 in New York City. After a positive week for stocks, the Dow Industrial Average fell more than 100 points in morning trading. (Photo by Spencer Platt/Getty Images)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter†
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