U.S. Stocks Dip as Interest Rates Remain in Focus

U.S. stocks fell for a second consecutive session on Wednesday as investors reconsidered their outlook for peak interest rates following the release of economic data that highlighted persistent inflationary pressures and hawkish comments from Federal Reserve officials.[0] The Dow Jones Industrial Average (DJIA) dropped 0.7%, the S&P 500 (SPX) slipped 0.3%, and the Nasdaq Composite (COMP) dipped 0.1%.[1]

The 10-year Treasury yield surged 8 basis points to 3.99%, hitting 4% at various times, before settling at 3.93%.[2] This was its highest level since November.[3] The jump was in part due to comments from Atlanta Fed President Raphael Bostic and Minneapolis Fed President Neel Kashkari, who both indicated a willingness to raise rates to ensure that inflation returns to the Fed’s 2% target.

The ISM Manufacturing Index rose to 47.7 in February from 47.4 in the prior month, though it remained in contraction territory. A significant increase in new orders was observed, indicating potential future growth.[4] The S&P Manufacturing PMI also increased to 47.3, slightly below the consensus for a rise to 47.8.

3M Co. (MMM) closed up more than 2% after the company said U.S. Department of Defense records show that there was no hearing loss among a “vast majority” of plaintiffs in the Combat Arms earplug litigation.[5] Nvidia Corp. (NVDA) fell a percent following its $10 billion mixed shelf offering.[6]

In overnight trading, Dow Jones futures edged higher versus fair value, while S&P 500 futures and Nasdaq 100 futures trended lower.[7] As investors digest the latest economic data and Fed comments, stock market today will be watching for more clues about the direction of interest rates and the health of the U.S. economy.

0. “Stock Market Today: Dow, S&P Live Updates for March 1” Bloomberg, 28 Feb. 2023, https://www.bloomberg.com/news/articles/2023-02-28/asia-stocks-set-for-cautious-open-yields-climb-markets-wrap

1. “Dow ends fractionally higher, but S&P 500 and Nasdaq fall as bond yields climb” MarketWatch, 1 Mar. 2023, https://www.marketwatch.com/story/u-s-stock-futures-rise-as-data-shows-chinese-economy-bouncing-back-a56018b0

2. “Stock market news today: Fears of high interest rates hit investors” Markets Insider, 1 Mar. 2023, https://markets.businessinsider.com/news/stocks/stock-market-news-today-investors-fear-high-interest-rates-fed-2023-3

3. “Dow Jones Falls On Weak Manufacturing Data; Elon Musk Readies For Tesla Investor Day” Investor’s Business Daily, 1 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-rise-ahead-of-manufacturing-data-elon-musk-tesla-investor-day

4. “Nasdaq, S&P, Dow slip as economic data, Fed comments weigh (SP500)” Seeking Alpha, 1 Mar. 2023, https://seekingalpha.com/news/3942691-nasdaq-sp500-dow-jones-stock-market-economic-data-fed-speakers

5. “Stocks Mixed As Global Bond Yields Jump” Barchart, 1 Mar. 2023, https://www.barchart.com/story/news/14667507/stocks-mixed-as-global-bond-yields-jump

6. “Resilient Stocks Look To Break Free As Nasdaq, S&P 500 Futures Climb: Brace For More Volatility, Sideways” Benzinga, 1 Mar. 2023, https://www.benzinga.com/news/earnings/23/03/31117635/resilient-stocks-look-to-break-free-as-nasdaq-s-p-500-futures-climb-brace-for-more-volatility-sidew

7. “Dow futures trade higher, Salesforce jumps 15.4% after earnings By Investing.com” Investing.com, 1 Mar. 2023, https://www.investing.com/news/stock-market-news/dow-futures-trade-higher-salesforce-jumps-154-after-earnings-3019625