NEW YORK (Reuters) – Financial shares led U.S. stocks lower on Tuesday to end a three-day rally as investors awaited comments from Federal Reserve Chair Jerome Powell at the end of the week.
The S&P 500 financial index .SPSY dropped 1.2%, and the group weighed most heavily on the benchmark index among its major sectors, which were almost all in the red.
Only consumer discretionary shares .SPLRCD posted gains, a modest 0.16% rise, as shares of Home Depot Inc (HD.N) climbed 4.4%. The home improvement retailer’s quarterly earnings, reported before the market open, beat estimates. Shares of rival Lowe’s Companies Inc (LOW.N) also rose 3.4%.
Prior to Tuesday’s session, U.S. stocks had recovered most of their losses from a steep sell-off on Wednesday, which was triggered by a brief inversion of the yield curve between 2-year and 10-year Treasuries, widely considered a harbinger of a recession. Reports of global stimulus efforts in China and Germany, along with the subsequent steepening of the yield curve, helped assuage recession fears.
The S&P 500 is now 3.8% shy of its record closing high in July after having fallen as much as 6.2% below that level.
With the major indexes having recovered much of last week’s losses, investors said they were now looking forward to Friday’s speech from the Fed’s Powell at the Jackson Hole central bankers’ conference for more clues on the course of monetary policy and interest rates.
“Everyone is waiting for Jackson Hole,” said Jim Awad, senior managing director at Clearstead Advisors in New York. “It’s a wait-and-see attitude until Friday.”
“We just got back a loss of 800 points,” he said, referring to the Dow Jones Industrial Average’s recovery from its decline last Wednesday.
Hints on the U.S. central bank’s plans may also be found in minutes from the Fed’s July policy meeting, which will be released on Wednesday.
The Dow Jones Industrial Average .DJI fell 106.46 points, or 0.41%, to 26,029.33, the S&P 500 .SPX lost 18.06 points, or 0.62%, to 2,905.59 and the Nasdaq Composite .IXIC dropped 41.59 points, or 0.52%, to 7,961.23.
Facebook Inc (FB.O) shares were the biggest drag on the S&P 500. They dropped 1.2% as the company said it was tweaking its policies to allow users to see and control the data that other websites and apps share with the social network to improve targeted advertising. A Bloomberg report that its digital currency Libra faces an anti-trust probe by the European Union also weighed on Facebook shares.
Shares of Netflix Inc (NFLX.O) fell 3.3% after Walt Disney Co (DIS.N) announced its streaming service would launch in Canada and the Netherlands on November. Disney shares edged up 0.2%.
Medtronic Plc (MDT.N) shares rose 3.1%, among the biggest percentage gains on the S&P 500, after the medical device maker raised its full-year adjusted profit forecast.
Declining issues outnumbered advancing ones on the NYSE by a 1.39-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.
The S&P 500 posted 30 new 52-week highs and five new lows; the Nasdaq Composite recorded 43 new highs and 76 new lows.
Reporting by April Joyner; Additional reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Anil D’Silva and Lisa Shumaker