Wall Street Close: Dow drops the most in seven weeks to end the volatile day

Cautious sentiment weighs on the US equity benchmarks.
Technology shares initially drowned markets before helping Nasdaq.
Upbeat earnings season, Fed fail to lift the mood.

Anil Panchal FXStreet

US equity markets had a volatile day, backed by the technology shares and inflation fears, on Tuesday. Stocks initially dropped as tech heavyweights remained pressured amid reflation woes while the following bounce in the tech-shares couldn’t save the bulls. Also, upbeat prints of the US second-tier data and the Federal Reserve (Fed) officials’ attempt to recall bulls failed the traders as well.

Although the stellar recovery of Netflix and Amazon helped Nasdaq to bounce off six week low, down 0.09% or 12.43 points to 13,389.43 on the day-end, the US equity benchmarks kept the red for one more day as fears of inflation pulling the chain of easy money escalated. As a result, Dow Jones Industrial Average (DJI30) dropped the most since late February, down 1.36% or 473.66 points to 34,269.16 whereas S&P 500 marked 0.87% daily loss to end Tuesday around 4,152.

It’s worth mentioning that the CBOE Volatility Index (VIX), a gauge of market fear, jumped to the highest in two months whereas the US 10-year Treasury yields added two basis points (bps) to 1.62% by the end of Tuesday.

The US JOLTS Job Openings and NFIB Business Optimism Index backed the market optimism for the world’s largest economy. Elsewhere, Reuters cites 86.9% of S& 500 companies beating earnings during this season as 451 have already released their numbers. Though, the fears of a brake on the Fed’s easy money policies outweighed the benefits.

Multiple Fed representatives kept battling Dallas Fed President Robert Kaplan’s push for tapering talks, even if he is a non-voting member, during their latest speeches

Looking forward, investors will keep their eyes on the US Consumer Price Index (CPI) for April, expected 3.6% YoY versus 2.6% prior, amid hopes of it being a short-term affair.

Read: US Consumer Price Index April Preview: The two base effects of inflation

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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