U.S. stocks attempt bounce after tech-led declines

What’s driving markets

Bulls were attempting to retake control Tuesday after a difficult period for stocks. The S&P 500 index has fallen in five of the past six sessions amid lingering concerns about an economic slowdown and some profit taking by fund managers before the end of the month and first half of the year in the wake of sturdy gains in certain sectors in 2023.

“The last trading week of both the quarter and the half-year will usually result in some portfolio rebalancing, particularly given the strength of the megacap technology stocks so far this year,” said Richard Hunter, head of markets at Interactive Investor.

“Indeed, the Nasdaq bore the brunt of this switch [Monday] as investors chose to take some profit after a strong run which has seen the tech index rebound strongly after a torrid [bad] 2022,” Hunter added.

Shares in the recently high-flying tech stock Nvidia Corp.
NVDA,
+0.91%,
which are up 178% so far this year but down 5.5% over the past five days, were up 1.2% Tuesday morning.

Fears that the Federal Reserve will keep borrowing costs higher for longer have also weighed on sentiment. Meanwhile, financial markets on Monday largely shrugged off a short-lived mutiny by Russia’s Wagner Group mercenary force that raised questions about Vladimir Putin’s grip on power.

Read: This analyst warned of a mutiny against Putin last year. Here’s what he thinks might happen next in Russia.

“Financial markets kicked off the week on a weak note, but not because of the Wagner’s mini, failed, or fake coup over the weekend, but because of the diminishing rate cut bets for the Federal Reserve for this year — and the beginning of next year,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

The Fed is expected to raise its policy interest rate by 25 basis points to a range of 5.25% to 5.50% toward the end of July, and not to start reducing the rate until spring 2024, according to recent market pricing.

However, helping risk appetite on Tuesday were comments from China’s premier Li Qiang, who said the world’s second-largest economy remains on track to achieve its annual growth target of around 5% and that Beijing would roll out policies to expand domestic demand and open markets.

Hong Kong’s Hang Seng Index
HSI,
+1.88%
rallied 1.9% and industrial commodities, such as copper
HG00,
+0.05%,
moved higher.

In U.S. economic data, orders for manufactured U.S. goods jumped 1.7% in May and rose for the third month in a row, boosted by strong demand for passenger planes and new cars. Economists polled by the Wall Street Journal had forecast a 0.9% decline. Durable goods are items meant to last a long time.

The S&P CoreLogic Case-Shiller 20-city house-price index rose 0.9% in April, as compared with the previous month. 

Other economic data on tap Tuesday include May new-home sales at 10 a.m. Eastern time, alongside a June consumer-confidence reading.

Companies in focus

• Walgreens Boots Alliance Inc. 
  WBA,
  -9.67%
  fell 8.5% after the drugstore chain and healthcare-services company reported fiscal third-quarter profit that missed expectations and cut its full-year outlook, citing “challenging consumer and macroeconomic conditions, and lower COVID-19 vaccine and testing volumes.”

• Delta Air Lines Inc. 
  DAL,
  +1.59%
  rose 1.5% after the airline raised guidance for 2023 and reiterated its guidance for 2024 in a presentation released ahead of an analyst day later Tuesday. 

• American Equity Investment Life Holding Co.’s
  AEL,
  +18.67%
  stock jumped 17%, after Brookfield Reinsurance Ltd. offered to buy the annuity provider in a $4.3 billion deal.

• Lordstown Motors Corp.
  RIDE,
  -44.67%
  shares slumped 45% after the electric-vehicle maker filed for bankruptcy protection.

• Snowflake Inc.
  SNOW,
  +2.56%
  shares gained 3.1% after announcing partnerships with Nvidia and Microsoft
  MSFT,
  +1.43%
  for artificial-intelligence uses.