All of the 11 main sectors finished in the red
U.S. stock-market indexes closed sharply lower on Tuesday, 27 Feb 2018 after Federal Reserve Chairman Jerome Powell highlighted the strengthening economy during his congressional testimony, but investors grew jittery that that improvement may prompt the central bank to be more aggressive in tightening monetary policy.
The Dow Jones Industrial Average tumbled 299.24 points, or 1.2%, to 25,410.03. The S&P 500 index fell 35.32 points, or 1.3%, to 2,744.28. The Nasdaq Composite Index declined 91.11 points, or 1.2%, to 7,330.35.
All of the 11 main sectors finished in the red. Consumer-discretionary and real-estate stocks led the losses. Walt Disney Company was the worst performer on the Dow, falling 4.5%. Merck & Co. fell 2.4%, while Nike dropped 2.3%.
Equity prices turned lower in early trade and extended losses into the close, while the bond yield on the 10-year Treasury shot up to 2.9%.
The ICE U.S. Dollar Index was up 0.5% to 90.29. Precious metals, often pegged to dollars, tend to fall when the buck strengthens because a falling dollar can make buying those assets cheaper for investors using weaker monetary units.
Bullion prices ended lower at Comex on Tuesday, 27 Feb, 2018 at Comex. Gold prices dropped on Tuesday, marking their lowest finish in more than two weeks, as the U.S. dollar strengthened and bond yields climbed on the back of new Federal Reserve Chairman Jerome Powell's first day of congressional testimony.
April gold fell $14.20, or 1.1%, to settle at $1,318.60 an ounce. That was its biggest one-day dollar and percentage loss since Feb. 20. May silver lost 20.4 cents, or 1.2%, to $16.346 an ounce.
Crude oil prices suffered a decline from three-week highs on Tuesday, 27 Feb 2018 pressured by expectations for a weekly build in U.S. crude stockpiles and concerns over growth in domestic production. Strength in the U.S. dollar, in the wake of Federal Reserve Chairman Jerome Powell's first day of congressional testimony, also put pressure on dollar-denominated prices of oil.
April West Texas Intermediate crude fell 90 cents, or 1.4%, to settle at $63.01 a barrel on the New York Mercantile Exchange. It snapped a string of three gains in a row and posted its biggest one-day point and percentage loss since Feb. 9.
Economic data at Wall Street showed that durable-goods orders plunged 3.7% in January, largely because of a big drop in contracts for passenger planes that was expected. An early look at U.S. trade patterns showed the trade gap in goodsservices are excludedrose 3% to $74.4 billion last month, with the increase in the nation's trade deficit likely to act as a drag on first-quarter gross domestic product.
Separately, home prices showed that they were still hot at the end of last year. The S&P/Case-Shiller national index rose a seasonally adjusted 0.7% in the fourth quarter of 2017 and was up 6.4% compared with a year before. ALso, Consumer confidence surged in February, the first month Americans started to benefit from the Trump tax cuts, to the highest level since November 2000.
U.S. Treasuries moved lower in tandem with the equity market following Mr. Powell's aforementioned comment, pushing yields back towards the multi-year highs they hit last week. The 2-yr yield ended three basis points higher at 2.26%, one basis point below last Wednesday's nine-year high, while the benchmark 10-yr yield climbed five basis points to 2.91%, which is four basis points below the four-year high it hit last Wednesday.
The rise in yields helped the S&P 500's financial sector keep ahead of the broader market on Tuesday, but the group still finished with a loss of 0.9%. The top-weighted technology sector also outperformed with a loss of 0.9%, but the nine remaining groups finished with losses between 1.0% and 2.2%.
On Wednesday, investors will receive another sizable batch of economic data; the weekly MBA Mortgage Applications Index will be released at 7:00 AM ET, the second estimate of fourth quarter GDP (consensus +2.5%) will be released at 8:30 AM ET, the Chicago PMI for February (consensus 64.5) will be released at 9:45 AM ET, and Pending Home Sales for January (consensus +0.4%) will be released at 10:00 AM ET.
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