The S&P 500 is down 0.4% in a frustrating session. The Nasdaq Composite (-1.2%) and Russell 2000 (-0.9%) are underperforming while the Dow Jones Industrial Average (+0.1%) is clinging onto a slim gain.
Part of the frustration stems from the fact that the major indices faded positive starts, which saw gains between 0.7% (S&P 500) and 1.0% (Dow). The early gains were catalyzed by reports describing a positive shift in talks with Ukraine, per President Putin, but not many people are believing that Mr. Putin has peaceful-minded intentions.
Other frustrating aspects include higher oil prices ($109.65, +3.63, +3.4%) after the U.S and Iran suspended talks for a nuclear agreement, a flattened Treasury yield curve that is signaling growth concerns, and another round of disappointing guidance/reactions from growth stocks – from DocuSign ( DOCU 71.21, -22.68, -24.2%) and Rivian ( RIVN 38.10, -3.05, -7.4%).
It’s no surprise, then, to see a lack of dip-buying efforts, but given the volatility this year, it wouldn’t be surprising to see something good happen this afternoon either. Presently, nine of the 11 S&P 500 sectors are trading lower with losses ranging from 0.1% (materials) to 1.1% (information technology).
The financials (+0.2%) and health care (+0.1%) sectors, like the Dow, are barely trading higher.
The mega-caps are exerting key pressure for the second straight day, evidenced by the 1.2% decline in the Vanguard Mega Cap Growth ETF ( MGK 212.59, -2.67), versus a 0.3% decline for the Invesco S&P 500 Equal Weight ETF ( RSP 150.63, -0.49).
Oracle ( ORCL 78.61, +1.98, +2.6%) is an exception after the company guided fiscal Q4 EPS and revenue above consensus, giving investors a good reason to overlook a rare EPS miss. ORCL shares are up 2.6%, paying little attention to an analyst downgrade to Underweight from Neutral at Piper Sandler.
In the Treasury market, the 2-yr yield is up three basis points to 1.75% amid persistent rate-hike expectations due to the inflationary environment, while the 10-yr yield is down three basis points to 1.98% amid concerns surrounding equities and the economy.
Reviewing today’s economic data:
- The preliminary March reading for the University of Michigan Consumer Sentiment Index checked in at 59.7 (Briefing.com consensus 62.5) versus the final reading of 62.8 for February. The March reading marks the lowest level for the index since October 2012.
- The key takeaway from the report is that rising inflation is eating away at consumer sentiment, as consumers recognize their purchasing power has been reduced because their income is not keeping up with inflation. That is apt to translate into reduced discretionary spending activity. Notably, it was indicated in the report that personal finances were expected to worsen in the year ahead by the largest proportion since the survey started in the mid-1940s.