Stocks retreat after S&P 500’s best session since June

Stocks ended lower on Tuesday as the major indexes pulled back after rallying a day earlier.

[Click here to read what’s moving markets heading into Wednesday, March 3]

Tech shares led the way lower and dragged the Nasdaq down 1.7%. A day earlier on Monday, the S&P 500 jumped by 2.4% for its best session since June 2020, while the Nasdaq jumped 3%. Shares of Zoom Video Communications (ZM), a darling of the “stay-at-home” trade, reversed overnight gains to slump more than 9% by market close even after the company delivered earnings results and guidance that far exceeded expectations, helping assuage fears of a slowdown as more in-person activities resume.

A combination of easing Treasury yields, optimism over Johnson & Johnson’s (JNJ) newly authorized COVID-19 vaccine and prospects of another near $2 trillion stimulus package out of Congress helped buoy risk assets earlier this week following a late February rout. The U.S. Senate is set to begin debating the $1.9 trillion relief package that the House of Representatives advanced over the weekend this week, Senate Majority Leader Chuck Schumer said.

And the benchmark U.S. 10-year yield eased below 1.45% this week after swiftly climbing to a one-year high of as much as 1.6% just last week. Investors have been closing eyeing the rise in interest rates as a cause for concern for equities, with rates closely tied to borrowing costs for companies and consumers. Rising rates can also divert investor attention away from stocks by offering an alternative source of yield for investors.

Still, many strategists also noted that modestly rising rates from last year’s ultra-low levels are not inherently problematic for stocks. And as Federal Reserve Chair Jerome Powell said late last month, rising rates and a steepening yield curve also serve as a sign of increasing optimism about the trajectory of the U.S. economy.

“I don’t think it’ll be an impediment for stocks to move forward as long as we see a move that’s commensurate on the economy,” Michael Arone, State Street Global Advisors chief investment strategist, told Yahoo Finance of February’s jump in the 10-year Treasury yield. “So as long as the economy continues to accelerate [and] rebound, earnings figures continue to come in solidly, I think that will allow us to tolerate higher interest rates. I think the real concern is that if the economy begins to slow down or the recovery isn’t as robust as expected, I think that’ll be the real challenge.”

4:01 p.m. ET: Stocks end lower, Nasdaq sinks 1.7% as tech stocks resume rout

Here’s where the three major indexes ended Tuesday’s session:

  • S&P 500 (^GSPC): 3,870.36, -31.46 points (-0.81%)

  • Dow (^DJI): 31,390.47, -145.04 points (-0.46%)

  • Nasdaq (^IXIC): 13,358.79, -230.04 points (-1.69%)

2:50 p.m. ET: Rocket Companies shares skyrocket, reaching a record high as highly shorted stock gains traction among social media investors

Rocket Companies (RKT), the consumer financial tech company and parent of Quicken Loans and Rocket Mortgage, soared to a record high on Tuesday, triggering a trading halt as the heavily shorted stock was cited as a possible target of investors on social media platforms like Reddit.

Shares were halted for volatility on the New York Stock Exchange between 2:10 and 2:15 E.T. on Thursday, after rising as much as 74% to a record high of $42.17 apiece.

“RKT’s stock price and short selling activity is reminiscent of another recent high flying meme stock – GameStop Inc (GME). Both stocks saw their share price spike due to high retail buying interest (predominantly due to significant social media activity) and an options based gamma squeeze,” S3 Analytics said in a note Tuesday. “Both stocks also had/have relatively high short interest and high stock borrow rates which imply strong short selling demand and very limited stock borrow supply.”

11:04 a.m. ET: Stocks erase gains to trade lower

The three major indexes fell Tuesday intraday, erasing modest gains from early on during the session.

The materials and energy sectors were the only sectors in positive territory in the S&P 500, while the real estate, information technology and utilities sectors sharply underperformed. Caterpillar, Apple and Microsoft each dropped more than 1% in the Dow, dragging the index lower. The Nasdaq shed 0.7%, underperforming against the S&P 500 and Dow as Big Tech stocks gave back some of Monday’s gains.

The small-cap Russell 2000 also unwound some of Monday’s advance, dropping about 0.9%. Still, the index is up more than 15% for the year-to-date, with small cap stocks surging earlier this year amid optimism about a strong economic recovery.

9:37 a.m. ET: ‘Clients bought the dip last week’: Bank of America

Traders heeded the time-honored tradition of “buying low” last week, pouring into stocks as the major indexes retreated, according to data from Bank of America.

“Clients bought the dip last week,” the firm said in a note Tuesday. “$2.8B [billion] of equity inflows by our clients were in the 95th percentile of weekly flows (since 2008), with net purchases of single stocks and ETFs each in excess of $1.5B.”

“Specifically, clients bought the Tech dip, with net buys of Tech stocks the largest of any week since Nov. 2019 and with inflows across all three client groups,” BofA added, with those three client groups comprising institutions, hedge funds and private clients.

9:30 a.m. ET: Stocks open slightly higher

Here’s where markets were trading just after the opening bell Tuesday morning:

  • S&P 500 (^GSPC): 3,905.14, +3.32 points (+0.09%)

  • Dow (^DJI): 31,581.35, +45.84 points (+0.15%)

  • Nasdaq (^IXIC): 13,595.73, +6.9 points (+0.05%)

  • Crude (CL=F): $61.02 per barrel, +$0.38 (+0.63%)

  • Gold (GC=F): $1,726.30 per ounce, +$3.30 (+0.19%)

  • 10-year Treasury (^TNX): -1.2 bps to yield 1.434%

7:45 a.m. ET: Kohl’s and Abercrombie & Fitch top 4Q earnings estimates as apparel retailers bounce back after difficult 2020

Kohl’s (KSS) and Abercrombie & Fitch (ANF) each reported fourth-quarter earnings Tuesday morning that beat consensus expectations, as the consumer shift from service-based to goods-based spending helped lift results at the apparel retailers.

Kohl’s adjusted earnings of $2.22 per share grew from $1.99 over last year, and easily topped estimates for 98 cents per share, based on Bloomberg consensus data. More prudent cost-cutting helped the company increase its profitability despite a drop in revenue, with sales down 10% to $5.88 billion during the three months ending in January. For the full year 2021, net sales are expected to return to growth in the mid-teens percentage range over the prior year, and earnings per share will come in between $2.45 and $2.95, the company said. Shares rose slightly in early trading.

Meanwhile, Abercrombie & Fitch posted adjusted earnings of $1.50 per share, also growing over last year and exceeding the $1.24 consensus estimate. Net sales decreased 5% to $1.12 billion, matching estimates. Like many other retailers, Abercrombie saw another jump in digital sales, with e-commerce revenue rising by 34%. Shares jumped more than 2% in early trading.

7:37 a.m. ET: Target 4Q sales soar past estimates, with big box retailer boosted by consumers’ bulk-shopping

Target (TGT) posted fourth-quarter results that handily exceeded expectations, extending a streak of soaring growth as consumers during the pandemic opted for big box stores where they could find all their shopping needs in one spot.

Comparable sales jumped 20.5% in the fourth quarter, coming in multiples above the 1.5% growth posted during the same quarter last year, and topping consensus estimates for 17.5% growth. Comparable digital sales soared 118%, more than doubling for a fourth straight quarter. And on the bottom line, adjusted earnings per share from continuing operations rose to $2.67, exceeding estimates for $2.49.

Following the banner growth in 2020, Target declined to provide revenue and earnings guidance for the current year and beyond due to uncertainty around COVID-19. Shares fluctuated between small gains and losses in early trading.

7:23 a.m. ET Tuesday: Stock futures erase overnight advances, pointing to a lower open

Here’s where markets were trading with about two hours to go until the opening ball on Wall Street:

  • S&P 500 futures (ES=F): 3,891.00, down 7.75 points or 0.2%

  • Dow futures (YM=F): 31,474.00, down 35 points or 0.11%

  • Nasdaq futures (NQ=F): 13,249.00, down 30.75 points or 0.23%

  • Crude (CL=F): $60.74 per barrel, +$0.10 (+0.16%)

  • Gold (GC=F): $1,727.60 per ounce, +$4.60 (+0.27%)

  • 10-year Treasury (^TNX): unchanged to yield 1.446%

6:17 p.m. ET Monday: Stock futures open higher to extend earlier advances

Here’s where markets were trading Monday evening:

  • S&P 500 futures (ES=F): 3,905.5, up 6.75 points or 0.17%

  • Dow futures (YM=F): 31,560.00, up 51.00 points or 0.16%

  • Nasdaq futures (NQ=F): 13,321.25, up 41.50 points or 0.31%

People walk past the New York Stock Exchange (NYSE) at Wall Street on February 17, 2021 in New York City. - Wall Street stocks retreated early Wednesday as worries about potentially higher inflation accompanied much better-than-expected US retail sales. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)

People walk past the New York Stock Exchange (NYSE) at Wall Street on February 17, 2021 in New York City. – Wall Street stocks retreated early Wednesday as worries about potentially higher inflation accompanied much better-than-expected US retail sales. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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