Investing.com -- The Dow closed lower Tuesday as investors digested a slew of earnings and a jump in Treasury yields after Fed Governor Christopher Waller downplayed the need for speed on rate cuts.
By 16:00 ET (21:00 GMT), the Dow Jones Industrial Average was down 231 points, or 0.6%, the S&P 500 fell 0.4% and the NASDAQ Composite dropped 0.2%.
Treasury yields climb as Fed Governor Waller says cools bets on early rate cuts
Federal Reserve Governor Christopher Waller said he expects the Fed to cut rates this year, but stressed that there was no need to the central bank to cut rates quickly as the economy remains in good shape. The remarks cooled some optimism for a cuts to begin in March, sending Treasury yields sharply higher.
The yield on the 10-year Treasury topped 4%, while the 2-year Treasury rose 9 basis points to 4.2%.
"In many previous cycles [...] the FOMC cut rates reactively and did so quickly and often by large amounts," Waller said Tuesday. "[H]owever, with economic activity and labor markets in good shape and inflation coming down gradually to 2 percent, I see no reason to move as quickly or cut as rapidly as in the past," he added.
Banks continue to roll out earnings
Goldman Sachs (NYSE:GS) rose nearly 1% after reporting better-than-expected fourth-quarter results as strength in equity sales and trading helped offset weakness at the Wall Street giant's core investment banking unit.
Morgan Stanley (NYSE:MS) reported mixed fourth-quarter results as earnings fell short of analyst expectations after profit was hurt by $535 million in charges. Its shares fell 4.2%.
PNC Financial Services Group Inc (NYSE:PNC), meanwhile, ended roughly flat after delivering a beat on the top and bottom lines, though the super regional bank also provided a soft outlook for 2024, forecasting revenue to be flat to down 2% from $21.5B in 2023.
Tesla dips as Elon demands more voting control to develop AI; Spirit Airlines plunges after Fed judge blocks JetBlue Airways purchase
Tesla (NASDAQ:TSLA) ended the day roughly unchanged after CEO Elon Musk said he would prefer to "build products outside of Tesla" unless the board increases his stake in the EV company to 25%, nearly double his current 13% stake.
The comments come as the Tesla board and Musk are awaiting the ruling on a lawsuit over his previous compensation before talks can begin on a new pay package.
"[I]f Musk ultimately went down the path to create his own company (separate from Tesla) for his next generation AI projects this would clearly be a big negative for the Tesla story," Wedbush said in a Tuesday note, though added that board and Musk are likely to "resolve this issue over the next 3-6 months and ultimately all AI initiatives will be kept within Tesla."
Spirit Airlines Inc (NYSE:SAVE) fell 47% after a federal judge blocked JetBlue Airways' deal to purchase the company, citing antitrust concerns. The judge alleged that the JetBlue Airways (NASDAQ:JBLU) takeover of budget rival Spirit Airlines would be anticompetitive and increase airfares for consumers.
Apple falls after court rejects App Store appeal, but chip stocks keep tech in green
Apple Inc (NASDAQ:AAPL) fell 1% after the US Supreme Court refused the tech giant's appeal that sought to overturn a lower court decision that would force the tech giant to make changes to its App Store policies.
The decision threatens to dent revenue from Apple's App store, which charges app developers a 30% commission for in-app purchases, as app developers would be allowed to provide alternative payment methods for consumers using their apps.
A jump in chip stocks, however, ensured tech stocks closed in the green, underpinned by rallies in chipmakers NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD), with Barclays lifting its price target on the latter to $200 from $120.
Energy stocks fall as oil prices swing amid Middle East tensions
Energy stocks were among the biggest decliners on the Wall Street as oil prices swung between gains and losses amid ongoing tensions in the Middle East including fresh attacks by Houthi rebels on cargo vessels in the Red Sea. Oil prices were also dragged lower by stronger dollar after Fed Governor Waller played down sooner rather later rate cuts.
EQT Corporation (NYSE:EQT), Marathon Oil Corporation (NYSE:MRO), and ConocoPhillips (NYSE:COP) were among the biggest decliners in the sector.
(Peter Nurse, Oliver Gray contributed to this article.)