Highlights
Another selloff in regional bank stocks and soft economic data led cyclicals lower Tuesday to pace a broad decline in equities. The Dow industrials and the Nasdaq both lost 1.1 percent while the S&P 500 fell 1.2 percent. Risk-off sentiment pushed down US Treasury yields and oil prices and lifted the dollar.
Relief over Monday's sale of First Republic Bank to JP Morgan gave way to renewed concern that other regional banks might face similar problems. That worry was aggravated by expectations the Federal Reserve will proceed with a 25 basis point rate increase on Wednesday. Hardest hit were Western Alliance Bancorporation, off 15 percent, and PacWest Bancorp, down 28 percent, though both recovered from early lows. Many bigger banks were off a more moderate 2 percent to 4 percent. Credit cards, investment banks, and insurance had a bad day too.
Energy stocks were the other big loser as oil prices continued reacting to weaker than expected Chinese manufacturing data released over the weekend. Investors generally viewed Tuesday's US job openings report as another signal the economy is slowing. Risk-off sentiment was aggravated by caution before Wednesday's Fed policy announcement.
Other sectors lagging included materials, real estate, media, airlines, and drug stores. On the positive side, Amazon recovered to boost consumer discretionary stocks. Pharma, home builders, grocery stores, beverages, and health and personal care stocks held up relatively well.
Relief over Monday's sale of First Republic Bank to JP Morgan gave way to renewed concern that other regional banks might face similar problems. That worry was aggravated by expectations the Federal Reserve will proceed with a 25 basis point rate increase on Wednesday. Hardest hit were Western Alliance Bancorporation, off 15 percent, and PacWest Bancorp, down 28 percent, though both recovered from early lows. Many bigger banks were off a more moderate 2 percent to 4 percent. Credit cards, investment banks, and insurance had a bad day too.
Energy stocks were the other big loser as oil prices continued reacting to weaker than expected Chinese manufacturing data released over the weekend. Investors generally viewed Tuesday's US job openings report as another signal the economy is slowing. Risk-off sentiment was aggravated by caution before Wednesday's Fed policy announcement.
Other sectors lagging included materials, real estate, media, airlines, and drug stores. On the positive side, Amazon recovered to boost consumer discretionary stocks. Pharma, home builders, grocery stores, beverages, and health and personal care stocks held up relatively well.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
