U.S. stocks fell on Tuesday, erasing earlier gains as the market failed to keep its rebound from the bear-market lows going.
The blue-chip Dow Jones Industrial Average fell 491.27 points, or 1.56%, to 30,946.99. The S&P 500 dropped 2.01% to 3,821.55, and the Nasdaq Composite was the laggard, down 3% to 11,181.54.
At one point, the Dow was up as much as 446.83 points, or 1.4%. The S&P 500 and Nasdaq gained as much as 1.2% and 1%, respectively. However, the major averages reversed those gains after the release of disappointing economic data.
The consumer confidence index fell to a reading of 98.7, down from 103.2 in May and missing a Dow Jones estimate of 100, according to The Conference Board. The weak data came as fears of a recession have increased lately as the Federal Reserve tries to combat surging inflation with aggressive rate hikes.
The Conference Board also said 12-month inflation expectations for its consumer confidence survey were at 8% for June, the highest level in data going back to August 1987.
“Right now we are at an inflection point in the economy, where actual spending and economic activity is still positive, however, consumer confidence and financial conditions (especially interest rates) are indicating a slowdown ahead,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “If we are able to avoid a recession then the stock market is fairly valued, however, if we do go into recession then we would expect the lows for the year haven’t been hit yet.”
Wall Street was coming off of modest losses from the previous session. Investors are still searching for a market bottom and hoping last week’s rally sticks, although there doesn’t appear to be a clear catalyst for a meaningful rebound.
“One of the trickier calls in this business is evaluating the difference between a bounce in a bear market vs. the start of a more durable advance,” wrote Chris Verrone, technical analyst with Strategas. “The current bounce, +8% over the last 4 trading days, has been impressive on the surface as most moves of this context tend to be, but again has yet to signal any resounding internal or leadership improvement.”
Retail stocks fell after the release of the consumer confidence data. Bath & Body Works lost 5.8%. Lowe’s fell 5.2%, while Home Depot and Macy’s each lost more than 4%. The SPDR S&P Retail ETF was down by 3.7%.
Shares of Nike fell 7% after the sportswear company issued weaker-than-expected revenue guidance for the current quarter. Nike said it sees flat to slightly up revenue for its fiscal first-quarter versus the prior year, and low double-digit revenue for 2023 on a currency-neutral basis, as it continues to manage Covid disruption in Greater China.
Chip stocks saw big declines, with Nvidia down 5.3% and Advanced Micro Devices lower by 6.2%. Marvel fell 4.9%. Meanwhile, Qualcomm added 3.5% after an analyst predicted Apple will use its modems for the 2023 iPhone.
On Tuesday, China relaxed its Covid restrictions for inbound travelers, cutting their quarantine time upon arrival by half to seven days. That gave travel and casino stocks a lift. Wynn Resorts and Las Vegas Sands rose 3.2% and 4%, respectively. Airlines initially moved higher but gave back gains as the market turned negative.
Disney shares initially got a lift from the news, after the company announced its Shanghai Disneyland will reopen this week. However, shares turned lower with the rest of the market.
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