Daily market review

United States

Profit-taking weakened equities Tuesday following Monday's advance, with growth stocks lagging value/cyclicals. The Dow Jones industrial average declined 0.5 percent, the S&P 500 fell 0.8 percent and the NASDAQ composite fell 1.7 percent.

Mega-caps Apple, down 2.1 percent, Microsoft, off 1.3 percent, and Facebook, down 2.2 percent, weighed on the averages.

Fed officials continued to dismiss suggestions that inflation expectations and bond yields are rising too fast, though Fed Governor Lael Brainard said last week's fast rise in yields "caught her eye." On the fiscal policy front, the Senate is expected to give final OK to the Biden administration's fiscal package by mid-March, and attention is turning to the administration's infrastructure spending plan.

Stock sectors holding up best were energy, materials, health care, consumer staples, and financials, while worst off were technology, consumer discretionary, real estate, and utilities.

Among companies in focus, Intel declined 2.6 percent after an unfavorable patent ruling. Zoom, the online meeting leader, gave back initial gains to end down 9 percent despite topping market expectations. Target, the retailer, fell 6.8 percent after its margins disappointed, to depress consumer discretionary. International Game Technology declined 2 percent on an earnings miss.

On the plus side, AutoZone rose 1 percent on strong earnings. TripAdvisor rose 6.7 percent on an analyst upgrade. RPay, the financial services company, gained 10.5 percent on an earnings and revenues beat.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 40 cents to US$63.63 while spot gold rose US$10.15 to US$1,733.76. The US dollar was mostly down vs. major currencies. The US Treasury 30-year bond yield was unchanged at 2.20 percent while the 10-year note yield fell 2 basis points to 1.41 percent.


Equities were flat to better Tuesday as European Central Bank officials continued to push back on rising bond yields. The Europe-wide STOXX 600 firmed 0.2 percent, the German DAX gained 0.2 percent, the French CAC firmed 0.3 percent, and the FTSE 100 firmed 0.4 percent.

ECB officials Tuesday expressed concern over the spike in bond yields, suggesting the central bank is open to increasing its asset purchases or even cutting interest rates to keep borrowing costs in check. "The steepening in the nominal GDP-weighted yield curve we have been seeing is unwelcome and must be resisted," said ECB executive board member Fabio Panetta. And ECB Vice President Luis de Guindos said the ECB "will be monitoring nominal sovereign bond yields "over the coming weeks and months."

Interest rates steadied after the remarks, and energy stocks rebounded as oil prices recovered some of the day's losses ahead of an OPEC+ meeting. Meanwhile, coronavirus headlines included a report that German Chancellor Angela Merkel favors maintaining a broad lockdown through the end of March.

Among sectors, outperformers included basic resources and insurance, while utilities and technology lagged.

Among companies in focus, Swiss Life gained 1.6 percent after saying it's in talks to resolve an inquiry with the US Department of Justice. Kion Group, the German manufacturer, rose 5.5 percent on an earnings beat. Lindt, the Swiss chocolatier, rose 3.3 percent on stronger-than-expected sales growth.

On the downside, HelloFresh, the food company, fell 7 percent on an earnings miss. Clothing retailer Boohoo dropped 2.4 percent on a report it faces a US inquiry into its labor practices. Edenred, the French financial services company, lost 4.4 percent on an earnings miss.

Asia Pacific

Equities retreated Tuesday with Chinese markets hurt by concern about more restrictive government policy aimed at curbing speculation.

China's Shanghai Composite Index fell 1.2 percent and the CSI300 index fell 1.3 percent after a Chinese banking regulator warned about speculation in the domestic property sector and asset bubbles overseas. That added to ongoing concerns that the People's Bank of China has been engineering tighter financial conditions. Consumer staples, health care, and financials led the selloff.

Hong Kong shares tracked Mainland Chinese markets lower after the Chinese regulator warned about bubbles. The Hang Seng index declined 1.2 percent, with energy and financial shares lagging, while IT and property held up better.

Japanese shares gave up initial gains to end lower on profit-taking after recent sharp gains, including Monday's 1 percent advance. The Nikkei 225 Index declined 0.9 percent and the Topix slipped by 0.4 percent.

Australian shares retreated, led by a selloff in mining and energy stocks on declining commodity prices and as Chinese markets sold off. Investors also reacted with disappointment to the Reserve Bank of Australia's decision to leave policy unchanged. The All Ordinaries index declined 0.5 percent.

Looking ahead*

On Wednesday in Asia/Pacific, Hong Kong PMI, Japanese PMI composite final, Australian GDP, Singapore PMI, Indian PMI composite, and Chinese PMI composite reports are due. In Europe, Swiss CPI and Eurozone PPI reports are scheduled along with final PMI reports for February from France, Germany, the Eurozone, and the UK. In North America, US ADP and US PMI composite final reports are on tap.

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