The market ended an abbreviated Tuesday session on a disappointing note, falling victim to a late tech-led sell off. The S&P 500 ended lower by 0.5%, closing near its worst mark of the day and dropping about six points below its 50-day moving average. The Dow (-0.5%) and the Nasdaq (-0.9%) also slid, but the small-cap Russell 2000 added 0.3%.
Stocks opened Tuesday's session mostly higher, but the underperformance of the top-weighted technology (-1.4%) and financials (-1.1%) sectors -- which represent around 40% of the broader market combined -- kept the major averages in check.
Eventually those two sectors -- in addition to other cyclical groups like consumer discretionary (-0.6%), industrials (-0.4%), and materials (-0.3%) -- broke into a full-fledged retreat, overpowering gains from most countercyclical groups. Telecom services was the top-performing sector with a gain of 1.2%.
A Chinese court ruling that temporarily banned Micron (MU 51.48, -3.00) chip sales helped fuel a final leg of selling late in the session, further stoking fears of a trade war between the world's two largest economies. Micron shares lost 5.5%, and the Philadelphia Semiconductor Index finished lower by 1.8%.
Late losses were also likely fueled by a desire to limit risk exposure ahead of the Fourth of July holiday break; U.S. markets will reopen on Thursday.
In other corporate news, shares of Tesla (TSLA 310.86, -24.21) tumbled 7.2% on Tuesday following a Business Insider report that CEO Elon Musk ordered engineers to stop putting nearly finished Model 3s through a critical "brake and roll" test in an effort to achieve the company's long-elusive production target of 5,000 Model 3s per week. Separately, Facebook (FB 192.79, -4.57) shares lost 2.3% after The Washington Post reported that a federal investigation into the company's data breach with Cambridge Analytica has expanded.
Away from stocks, WTI crude futures had a volatile session, trading between -1.6% and +1.8%, before closing flat at $73.94 per barrel. News of supply disruptions in Libya and Canada helped fuel early gains, which were then rolled back following a subsequent report that Saudi Arabia is ready to use its spare capacity to maintain stability in the oil market.
Elsewhere, U.S. Treasuries rallied on Tuesday, pushing yields lower across the curve; the yield on the benchmark 10-yr Treasury note dropped to 2.83% from 2.87%. Meanwhile, the U.S. Dollar Index declined 0.2% to 94.41, and the CBOE Volatility Index jumped 4.9% to 16.37.
Tuesday's economic data was limited to Factory Orders for May:
- The Factory Orders report for May showed an increase of 0.4% (Briefing.com consensus -0.2%). The April reading was revised to -0.4% from -0.8%.
- The key takeaway from the report is that shipments of nondefense capital goods excluding aircraft were higher than what was seen in the Advance Durable Goods Orders Report for May. That improvement, though, was offset to large extent by a downward revision to April, so it shouldn't move the needle that much in terms of Q2 GDP growth prospects.
U.S. markets will be closed on Wednesday in celebration of the Fourth of July.
- Nasdaq Composite +8.7% YTD
- Russell 2000 +8.1% YTD
- S&P 500 +1.5% YTD
- Dow Jones Industrial Average -2.2% YTD