US stocks are experiencing a decline on Tuesday, with the S&P 500 poised for its first consecutive loss in six weeks as the recent rally on Wall Street appears to be losing steam.
In early trading, the S&P 500 fell by 0.4%. This decline follows a modest drop on Monday, ending a six-week streak of gains, which was the longest such period of the year. The Dow Jones Industrial Average decreased by 91 points, or 0.2%, moving further away from its all-time high reached on Friday. Meanwhile, the Nasdaq composite experienced a 0.5% drop as of 9:35 a.m. Eastern time.
Several notable companies reported disappointing earnings, contributing to the overall market decline. Kimberly-Clark, known for brands like Kleenex and Huggies, saw its shares tumble 4.5% despite reporting stronger-than-expected profits for the latest quarter. However, the company’s revenue fell short of forecasts, prompting it to lower its growth expectations for the year.
Verizon Communications also faced a downturn, with its stock falling 6.2% after reporting weaker-than-expected revenue, despite profits that exceeded analysts’ estimates. Similarly, Sherwin-Williams shares dropped 3.6% after both profit and revenue figures failed to meet expectations, with the company’s CEO citing a challenging macroeconomic environment and weak demand from do-it-yourself customers in North America.
In contrast, 3M managed to boost market sentiment, with its stock rising 4% after reporting better-than-expected profits and revenues, along with an upward revision to its profit forecast for the year.
The market’s recent momentum has slowed under the pressure of rising Treasury yields in the bond market. On Tuesday, the yield on the 10-year Treasury note eased to 4.16%, down from 4.20% late Monday, although it remains higher than the 4.08% level recorded just last Friday. Increased Treasury yields can lead investors to reconsider high stock valuations, which some analysts believe may be excessive.
Rising Treasury yields are a response to reports indicating that the US economy remains stronger than anticipated, raising hopes that the country may avoid a severe recession despite ongoing inflation. However, this resilience also leads traders to adjust their expectations for future interest rate cuts by the Federal Reserve. Currently, traders expect the Fed to reduce its main interest rate by half a percentage point by the end of the year, a decrease from earlier projections of larger cuts.
In international markets, European indexes were generally lower, even as German software giant SAP reported profits that exceeded expectations. Asian markets showed mixed results.
With input from the Associated Press and Reuters.
