by Caroline Valetkevitch
NEW YORK (Reuters) – The New York Stock Exchange ended lower on Tuesday as investors questioned the timetable for lowering rates from the US Federal Reserve (Fed), which could be later than expected, while Tesla weighed in after reporting a decline in its quarterly deliveries for the first time in nearly four years.
The Dow Jones index lost 1%, or 396.61 points, to 39,170.24 points.
The broader S&P-500 lost 37.96 points, or 0.72%, to 5,205.81 points.
The Nasdaq Composite fell 156.38 points (0.95%) to 16,240.45 points.
Recent data showing the strength of the US economy has raised doubts about the prospect of the Fed making three rate cuts this year, as the US central bank suggested last month after its meeting two days of monetary policy.
A report released Tuesday indicates that new orders for U.S. manufacturing products rose more than expected in February, while the number of job openings remained at a high level.
The CBOE Volatility Index, considered a gauge of the level of fear on Wall Street, climbed.
The idea of higher rates for longer “is coming back to the forefront despite the fact that the Fed is planning to cut rates at some point this year,” said Quincy Krosby, chief strategist at LPL Financial in Charlotte in North Carolina. “So that worries the market.”
According to FedWatch, traders are about 57% betting on a 25 basis point rate cut in June, up from 64% last week.
According to a probability calculation carried out by LSEG, market expectations are now lower, with two rate cuts anticipated this year.
Several Fed officials are expected to speak this week. San Francisco Fed President Mary Daly on Tuesday noted the “real risk” of cutting rates prematurely, while her Cleveland counterpart, Loretta Mester, said she still expected the central bank to American can ease its monetary policy this year, possibly as early as June.
In addition to comments from Fed officials, investors are also awaiting the publication on Friday of the monthly employment report.
The yield on ten-year US Treasury bonds stood on Tuesday at its highest since the end of last November, fueling caution on Wall Street.
Tesla lost 4.9% after reporting deliveries in the January-March period fell for the first time in almost four years and forecasts were lower than expected, suggesting that price cuts intended to support demand were insufficient .
Health sector stocks, including UnitedHealth, CVS Health and Humana, fell sharply, as the US government left the reimbursement rate applied to Medicare Advantage contracts unchanged, raising fears of margin compression next year.
Also note the 22% drop in PVH, parent company of the Calvin Klein brand, which said it anticipated a drop of around 11% in its turnover in the first quarter.
(Written by Jean Terzian)
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