Nasdaq, S&P 500, Dow Jones cut losses as megacap sectors gain

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Stocks showed solid losses going into the final hour of trading on Tuesday, as investors trimmed their positions after the massive rebound that took place late last week.

After spending some time in positive territory earlier in the day, the Nasdaq (COMP.IND) was -0.6%, down 62 points to 12,069. The S&P (SP500) also gave up earlier gains to show a performance of -0.6%, down 24 points to 4,135. The Dow Jones (DJI) was -0.6%, off 208 points to 33,005.

Nine of the 11 S&P sectors are lower. Energy, Health Care and Materials were among the worst performers.

Rates are higher, with the 10-year Treasury yield up 10 basis points to 2.85% and the 2-year up 5 basis points to 2.55%.

“Equities finally reversed their weekly losing streak with authority, which sets the stage for summer chop in the 3,800 and 4,250 zone,’ Jonathan Krinsky, technical strategist at BTIG, said. “Ultimately, we continue to think 3,400-3,500 is likely, but it’s probably a late summer or early fall event.”

Krinsky added: “The bigger near-term event that we see is a momentum reversal in sector performance. The strategy of buying winners and selling losers is coming off the most extreme level in over 13 years. This means energy should be vulnerable into a seasonal weak time of year, while tech/ growth/long-duration should be able to bounce further.”

Looking to the economic front, the March FHFA House Price Index showed signs of easing in March: +1.5% M/M vs. +1.9% consensus and +1.9% prior figure (revised from +2.1%).

Meanwhile, the Conference Board said its May consumer confidence index dropped to 106.4, not as big a decline as expected.

“As always, remember that sentiment and spending are not the same thing, and we have no experience of how these surveys behave when consumer have huge piles of excess savings, accumulated during Covid,” Pantheon Macro’s Ian Shepherdson said. “So far, they have been willing to dip into these savings despite reporting that they feel less positive. It’s not called retail therapy for nothing, but we just don’t know how long it will continue.”

In commodities, oil moved higher early in the day, topping $119 a barrel, as EU leaders have agreed to ban most Russian oil imports. However, crude has largely reversed those early gains and is now sitting near $115 a barrel.

Among individual stocks, DexCom is among the biggest gainers in the S&P after the company rejected M&A rumors.