- Wall Street in the red
- Heath insurers tank on Medicare payments
- Tesla tumbles 4.9% on weak sales
4:16pm: Dow leads losses
US stocks finished Tuesday’s trading day lower as stronger than expected labor and manufacturing data curbed rate cut expectations.
The Dow Jones fell almost 400 points or 1% at 39,170 points.
The Nasdaq was also down 1% at 16,240 points while the S&P 500 shed 0.7% at 5,205 points.
There was a pullback in health insurance stocks after the Biden administration confirmed that final Medicare Advantage rates for 2025 will increase by 3.7% on average, below what had been expected.
Humana (NYSE:HUM) plunged 13.5%, CVS shed 7.2% and UnitedHealth Group was down 6.5% at the closing bell.
Meanwhile, Tesla shed 4.9% at $166.63 after its first quarter vehicle deliveries missed forecasts.
12:30pm: Market sluggishness continues
Stocks had slid lower at the midday point of trading Tuesday, signaling another day of sluggishness.
Just after noon, the Dow Jones was down almost 1.2% and the S&P 500 had shed 1%, while the tech-heavy Nasdaq fell 1.3%.
Bond yields rose, with the yield on the benchmark 10-year Treasury hovering around 4.38%, its highest level of 2024.
Meanwhile, doubts about a potential interest rate cut have surfaced amid stronger-than-expected manufacturing data, putting pressure on the markets.
Health insurer stocks, including Humana (NYSE:HUM) and CVS, dropped following the morning’s regulatory news, while Tesla stumbled about 6% after disappointing delivery numbers in the first quarter.
Additionally, new data from the Bureau of Labor Statistics revealed a slight increase in job openings and hires in February.
“Traders reacted to an unexpected expansion in US manufacturing for the first time since September 2022, suggesting a stronger economy,” George Khoury, Global Head of Education and Research at CFI wrote in a note Tuesday.
“Consequently, traders are adjusting their expectations regarding interest rate cuts from the Federal Reserve this year. Sustained job growth indications from the upcoming US non-farm payroll data could support the view that rates could stay high for longer as speculation that the Fed may delay its first rate cut has grown.
“Moreover, several Federal Reserve officials are slated to speak, and could affect the market.”
9.35am: US stocks open lower
US markets have opened lower on Tuesday, with the Dow Jones holding flat at 39,172.
The S&P 500 and the Nasdaq are down 46 and 220 points respectively.
Shares in Tesla opened around 6.5% lower after it revealed it had suffered its first drop in sales since the start of the pandemic, with the EV maker losing market share to rivals.
Over 386,810 vehicles were delivered by Tesla during the first quarter, down compared to Wall Street guidance of 449,080.
Meanwhile several health insurers slid after the Centres for Medicare & Medicaid Services announced payments from the government towards Medicare and drug prescriptions would rise 3.7% year-on-year - unchanged from previous plans.
Humana (NYSE:HUM) (Humana (NYSE:HUM)) fell 10%, while UnitedHealth and CVS Heath dropped 7% and 6.5% respectively.
8.42am: Wall Street to open lower
US stocks are scheduled to open lower on Tuesday, continuing on from Monday's losses after bond yields lifted higher and the odds weakened for a June interest rate cut.
The Dow Jones is expected to open around 278 points lower at 39,937, while the S&P 500 and Nasdaq are down 29 and 109 points respectively.
Much of the changes regarding interest rate cuts and bond yields came after the US released inflation data at 2.8%, still near December and January's 2.9% and a way off the Fed's target of 2%.
On Monday, manufacturing data showed the industry had switched to expansion after sixteen consecutive months of contraction.
David Morrison at Trade Nation added: "Much of the first quarter’s gains were built on excitement over the future of generative AI. So there are concerns that this could be a bubble that’s about to pop.
"But there’s evidence that investors are broadening their horizons, and seeking out smaller and relatively undervalued companies."