U.S. equities seesawed on Tuesday, while Treasury yields pushed higher as a rout in the stock and bond markets persisted ahead of third-quarter earnings season.
The S&P 500 (^GSPC) sank 0.3% after falling 1% to briefly touch a two-year low, while the Dow Jones Industrial Average (^DJI) gained 150 points, or 0.5%. The Nasdaq Composite (^IXIC) fell roughly 0.6% after the technology-heavy index hit its lowest level since July 2020 to start the week. Meanwhile, the benchmark 10-year Treasury again tested 4%.
Investors are navigating a murky week marked by producer and consumer inflation data and the first reporters of third-quarter earnings season, which include four of the country’s largest banks by assets.
Markets remain on edge over the government’s Consumer Price Index (CPI) due out Thursday, which is likely to show inflation remained persistently high despite aggressive intervention by the Federal Reserve to slow the economy. Following the release of August’s CPI print on Sept. 13, the S&P 500 plunged 4.3% in its worst day of the year so far.
Analysts at JPMorgan warned in a note on Tuesday that if September’s reading comes in higher than the prior month’s 8.3%, the S&P 500 may drop as much as 5%.
In a rare admission, Federal Reserve Vice Chair Lael Brainard said policymakers must be prudent in lifting rates higher amid global macroeconomic uncertainty as previous hikes still work their way through the economy.
“Moving forward deliberately and in a data-dependent manner will enable us to learn how economic activity, employment, and inflation are adjusting to cumulative tightening in order to inform our assessments of the path of the policy rate,” she said Monday at the National Association for Business Economics’ annual meeting, as the U.S. central bank appears to be on pace for a fourth 75-basis-point increase in November.
