The S&P 500 was 0.5% lower in early trading, coming off its best day in nearly two months. The Dow Jones Industrial Average was down 240 points, or 0.6%, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.
Eversource Energy tumbled 5.9% for one of the worst losses in the S&P 500 after it said it could take a hit of up to $1.6 billion against its results for the end of 2023. It’s negotiating the sale of its stake in several offshore wind projects, and it may need to account for a lower value for them due to several challenges.
Tech stocks were also back to sinking, a day after helping to lead the market. Microchip Technology fell 1% after it said it expects to report a worse drop in revenue than it expected for the end of 2023 from the prior quarter. It said a “weakening economic environment” pushed customers and distributors to receive fewer shipments and pull out of inventories instead.
Another tech company, Unity Software, sank 3.8% after it said it would cut about a quarter of its workforce or 1,800 positions.
Boeing was falling again, but not as much as on Monday, the first trading day after one of its jets flying for Alaska Airlines suffered an in-flight blowout over Oregon. Its stock was down 1.9% after tumbling 8% Monday. Spirit AeroSystems, which makes fuselages and other parts for Boeing, fell 1.4%.
Elsewhere in the airline industry, JetBlue Airways lost 6% after its chief executive, Robin Hayes, said he will step down for health reasons. He will be replaced by JetBlue’s current president, Joanna Geraghty, who will become the first woman to lead a major U.S. airline.
Financial markets have had a slow start to the year after roaring into the end of 2023. The S&P 500 had leaped to nine straight winning weeks to close out the year, mostly on rising hope that the US economy will remain resilient and the Federal Reserve will cut interest rates sharply through 2024.
Some mixed data recently has bolstered criticism saying Wall Street may have gotten too optimistic about the number of rate cuts coming. The Federal Reserve has already raised its main interest rate to the highest level since 2001, hoping to grind down the economy and investment prices to get inflation under control.
With inflation down considerably from its peak, the Fed has indicated it may cut rates three times through 2024. That would give investment prices a boost and relax the pressure on the economy and financial system.
But traders are still betting on a better than 50% probability for at least six cuts, or double the Fed’s projection, according to data from CME Group. Critics say such a high number is unlikely unless the economy falls into a recession.
Treasury yields have already slid on anticipation of rate cuts, and they were holding relatively steady on Tuesday. The yield on the 10-year Treasury was holding at 4.01%.
In the oil market, crude prices clawed back some of their sharp losses from the day before, when Saudi Arabia made moves hinting at weakening demand. A barrel of benchmark US crude rose 1.2% to $71.59. Brent crude, the international standard, gained 1.4% to $77.22.
This week’s headline events for Wall Street are likely to come toward the end of it. On Thursday, the US government will give its latest monthly update on inflation at the consumer level. Continued progress there could show whether Wall Street’s hopes for rate cuts are justified or fanciful.
On Friday, big companies in the S&P 500 will begin reporting their results for the final three months of 2023. The broad expectation is for companies in the index to report modest growth in earnings per share from a year earlier.
In stock markets abroad, Japan’s Nikkei 225 rose 1.2% to notch its highest close since 1990. Indexes elsewhere had more modest moves, with many edging lower.
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