The Dow Jones fell nearly 600 points on Tuesday, or 1.8%, a day after stocks closed their second consecutive monthly decline to start the year. The Dow, however, managed to end its lows of the day.
The Nasdaq and S&P 500 were also hit hard, with each index falling about 1.6%.
Rising oil prices, which soared nearly 10% on Tuesday to over $104 a barrel for the first time in more than seven years, are hurting sentiment. The same goes for the rapid fall in long-term bond yields. The 10-year Treasury rate fell to around 1.7%, its lowest level since early January.
Falling bond rates are bad news for financial companies, which tend to make more money from lending and other activities when rates are higher. American Express (AXP), JPMorgan Chase (JPM), Visa (V) and Goldman Sachs (GS) were among the Dow’s biggest losers on Tuesday.
Investors are now betting that rates will also stay quite low for some time. According to CME futures, traders are even pricing in a 2% chance that the Federal Reserve will keep rates at zero at its next meeting on March 16.
The Fed is still expected to hike rates, but now by only a quarter point. A week ago, the market was torn between whether the Fed would hike rates by a quarter point or half a point.
Fed Chairman Jerome Powell may talk more about the direction rates are heading in his semiannual testimony to Congress this week. He speaks before the House Committee on Financial Services on Wednesday and the Senate Banking Committee on Thursday.
Chevron (CLC) was the Dow’s biggest gainer on Tuesday, up nearly 4%. The energy giant is benefiting from rising oil prices and the company has also raised its share buyback target this year.
Retail stocks were also among the market gainers on Tuesday. Target and Kohl’s both announced higher-than-expected earnings and strong prospects for 2022. Target (TGT) shares jumped 10% on the news.
Kohls (KSS) the stock was up 2% and Dow components walmart (WMT) and Home deposit (High Definition) joined too.
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