Stock Market Plunges as Dow Drops by Nearly 400 Points, Yields Reach Highest Level Since 2024

Stock Market Plunges as Dow Drops by Nearly 400 Points, Yields Reach Highest Level Since 2024

U.S. stocks opened lower on Tuesday, signaling another day of slump as health insurers fell and investors faced the possibility that an interest rate cut could come later than expected.

The Dow Jones Industrial Average (^DJI) slipped nearly 1%, or more than 400 points, bringing the blue-chip index back to an attempt at the key 40,000 level. The S&P 500 (^GSPC) lost 0.8%, while the technology-heavy Nasdaq Composite (^IXIC) fell 1.2%.

US bonds continued to struggle, while the yield on the benchmark 10-year Treasury index (^TNX) stands at around 4.38%, hovering at its 2024 highs.

The shares made a poor start in the second quarter after accumulating a chain of records in the first months of 2024. Warmer-than-expected manufacturing numbers, combined with increases in prices paid, have given weight to growing doubts about whether the Federal Reserve will cut rates in the first half as The American economy is showing surprising resilience.

An update on job openings data later Tuesday should provide food for thought in the countdown to Friday’s jobs report, a key element in the Fed’s decision-making. The market will also listen to comments from Fed officials Michelle Bowman, Loretta Mester and Mary Daly on whether its inflation problem could derail the three planned rate cuts.

A decline in health insurer stocks weighed on markets early Tuesday, after U.S. regulators surprised the sector by failing to increase payments for private Medicare plans, as usual. Human (HUM) shares fell about 10%, while CVS (CVS) lost almost 6%.

In single stock moves, Tesla (TSLA) stock fell about 6% after the company delivered fewer cars than expected in the first quarter.

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  • Stocks open lower after yields hit 2024 highs

    Stocks were lower Tuesday as bond yields rose for the second straight day.

    The Dow Jones Industrial Average (^DJI) slipped nearly 1%, or more than 400 points, bringing the blue-chip index back to an attempt at the key 40,000 level. The S&P 500 (^GSPC) lost 0.8%, while the technology-heavy Nasdaq Composite (^IXIC) fell 1.2%.

    The 10-year Treasury yield (^TNX) jumped about six basis points to nearly 4.39%, its highest level of 2024. The move comes after a warmer-than-expected reading of March ISM price increases fueled inflation fears and pushed the 10-year Treasury yield up more than 10 basis points. Monday.

    The 10-year Treasury yield is now at its highest level since November and has surpassed Morgan Stanley Chief Investment Officer Mike Wilson’s level. recently reported also critical for stock investors.

    “We view 4.35% of the 10-year U.S. Treasury yield as an important technical level to watch for signs that rate sensitivity may be increasing for stocks,” Wilson wrote in a March 17 note.

    Wilson noted that large caps have been less rate sensitive recently. “Small caps are likely to demonstrate greater rate sensitivity than large caps if yields rise,” he said.

    To return to Wilson’s point, the Russell 2000 small-cap index (^RUT) fell more than 1% at the start of Tuesday’s session.

  • Stock Market Plunges as Dow Drops by Nearly 400 Points, Yields Reach Highest Level Since 2024

    Tesla shares fall after delivery failure

    You’re here (TSLA) stock stumbled in premarket trading, falling about 7% after the company delivered fewer cars than expected in the first quarter.

    Tesla announced that it delivered 386,810 cars in the first quarter, below Wall Street estimates of 449,080. This is the first annual decline in first-quarter deliveries since 2020.

  • Consumer stocks take center stage as gas prices rise

    Actions mobilized for consumer spending could turn frigid this spring.

    Oil prices hit $85 a barrel this morning, a five-month high. Oil’s advance — which could begin to weigh on the broader market — has lit a fire in falling gas prices nationwide. The national gasoline price average of $3.51 per gallon last week remained unchanged week over week – after prices increased for four straight weeks.

    Still, gas prices rose 16 cents from the previous month.

    “While we appear to be approaching a near-term peak, a word of warning to those in the Mid-Atlantic and Northeast: you have not yet completed the transition to summer gasoline, so you could be in for a shock in a few weeks.” Prepare for some punch. For the rest of the country, until we see extenuating circumstances, we will likely be near a price peak. Let’s hope this comes to fruition and lasts! ” said Patrick De Haan, head of petroleum analysis at GasBuddy in a new blog job.

    As gas prices have risen, the SPDR Consumer Discretionary Select Sector Fund (XLY) fell 1.4% last month – perhaps due to concerns over consumer spending. The fund’s top discretionary retailers, such as Amazon (AMZN), Starbucks (SEX) and Nike (OF) have relatively underperformed the S&P 500 over the past month.

    Interestingly, Walmart (WMT) stock has risen 2% over the past month as investors view the retailer as a bearish play on rising gas prices.

  • Health insurance stock tank

    Health insurance stocks are sent to their sick beds on Tuesday.

    Human (HUM) is drilled to the tune of 9% before commercialization, pressures also being observed on UnitedHealth Group (A H) and Cigna (THIS). The selloff comes as U.S. regulators have failed to raise payments for Medicare Advantage plans in line with Wall Street estimates.

    Payments will increase by 3.7% on average in 2025, a decrease of around 0.2% year-on-year.

    Lisa Gill, a longtime health care analyst at JP Morgan, said in a client note that came as a “surprise” because many on the Street were expecting an increase “given the environment of ‘use”.

    Humana is considered most exposed to the decision by the Centers for Medicare and Medicaid Services.

    Key call from Humana latest annual report:

    “As of December 31, 2023, we provided health insurance coverage under CMS contracts to approximately 5,408,900 individual Medicare Advantage members, including approximately 851,300 members in Florida. These Florida contracts represented approximately $14.9 billion in premium revenue, which represented approximately 19% of our individual revenues. Medicare Advantage premium revenue, representing 14% of our consolidated premium and service revenue for the year ended December 31, 2023.”

    RBC analyst Ben Hendrix said in a note this morning that Humana’s earnings forecast will need to be reset following the decision and the stock could remain under pressure. Conversely, Hendrix recommends clients buy Cigna stock in a downturn.

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