U.S. were little changed Tuesday as an uptick in rates put pressure on the broader market.
The S&P 500 traded 0.2% lower, along with the Nasdaq Composite. The Dow Jones Industrial Average dipped slightly as well.
Bond yields rose, with the rate on the 2-year U.S. Treasury note rising back above 4%. Worries about the crisis among U.S. regional banks have been assuaged thanks in part to policymakers’ efforts to alleviate the challenges, and investors’ fear that higher rates could push the economy into a recession came back into focus.
The moves follow a mixed session on Monday. Investors fought to extend last week’s gains, but tech shares came under pressure. The Dow Jones Industrial Average added 194.55 points, or 0.6%, while the S&P 500 gained 0.16%. The Nasdaq Composite dipped 0.47% as tech stocks moved lower.
A slew of positive news reports helped lift sentiment on Wall Street Monday, including First Citizens BancShares’ agreement to buy large parts of Silicon Valley Bank. Further, CNBC reported that deposit flows out of small institutions and into banking behemoths have slowed.
Eight of 11 S&P 500 sectors finished in positive territory on Monday, led to the upside by a 2.1% gain in energy. Beaten-up regional bank stocks, including First Republic, climbed along with the SPDR S&P Regional Banking ETF (KRE). Communication services and information technology, which have enjoyed a strong 2023, both slipped.
“Basically, you have an oversold bounce in these areas that have been beaten up and you’re having a pause from some of these areas that are leadership,” said Keith Lerner, Truist’s co-chief investment officer. “I don’t think this is a trend reversal; I don’t think this is new leadership.”
Markets may also be taking news of First Citizens’ plan to buy a large chunk of SVB as a positive, he said.
Earnings season continues Tuesday with results from Micron Technology, Lululemon and Dave & Buster’s. Investors also await home price data and The Conference Board’s consumer confidence report.
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