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Market Snapshot: U.S. stocks renew slide after wild day on Wall Street

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Here we go again.

After a wild day of trading that saw a 1,000-point-plus upside reversal by the Dow, U.S. stocks were back under pressure Tuesday as the Federal Reserve kicked off a two-day policy meeting and investors sifted through a mixed bag of corporate earnings.

Trading remained volatile, however, with equities tumbling sharply in early trade before trimming the decline.

What’s happening
  • The Dow Jones Industrial Average DJIA, -0.97% was down 280.26 points, or 0.8%, at 34,084.24, after falling more than 800 points at its session low in early Tuesday action.
  • The S&P 500 SPX, -1.71% declined 67.21 points, or 1.5%, at 4,342.92, after briefly trading in correction territory. A close below 4,316.90 would mark a 10% fall from the benchmark’s Jan. 3 record finish, meeting the definition of a market correction.
  • The Nasdaq Composite COMP, -2.41% dropped 254.17 points, or 1.8%, to 13,600.96.

In regular trading Monday, the Dow DJIA, -0.97% gained 99.13 points, or 0.3%, to finish at 34,364.50, after being down by as much as 3.3% earlier in the day. The S&P 500 SPX, -1.71% notched a 0.3%, gain after sinking as much as 4% and briefly falling into correction territory. The Nasdaq advanced 0.6%, at 13,855.13, erasing a 5% intraday slump.

Read more: The S&P 500, Nasdaq just staged a turnaround for the ages, marking their largest comebacks since the 2008 financial crisis

What’s driving markets

The sharp selloff and surprise rally in U.S. stocks on Monday came amid market uncertainty stoked by rising inflation, disappointing corporate earnings, anxiety about the Fed’s expected policy changes, fears of a Russian invasion of Ukraine and the ongoing COVID-19 pandemic.

The Nasdaq Composite last week entered correction territory as it fell more than 10% from its all-time high in November. The index, which is heavy on interest rate-sensitive growth stocks, was battered as Treasury yields rose sharply to begin the year as investors ramped up expectations for Federal Reserve rate increases.

“Markets are now in no doubt that policy makers need to act quickly to get a grip on inflation. But there are worries that the Fed has fallen so behind the curve, it won’t be possible to bring inflation back under control without choking off growth,” said Raffi Boyadjian, lead investment analyst at XM, in a note.

Need to Know: These five signals will tell you when the Wall Street correction is over, says veteran strategist

The central bank began a two-day policy meeting Tuesday, that’s expected to see officials lay the groundwork for a rate increase in March and that will be closely watched for clues to the pace of further hikes and how soon and quickly it will begin winding down its balance sheet.

“Recent price action suggests the long overdue equity market correction has finally begun. In our view, this is a healthy long-term development,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities, in a Tuesday note.

“We are not calling a bottom to the market but, with the broad market index down a bit over 10%, it is time to begin nibbling at some of the more beaten down areas of the market,” he wrote. “This window of opportunity could stretch until the March 25 rate hike, but that does not mean value has not already been created in the most distressed areas of the market.”

A survey of consumer confidence fell 1.4 points in January to 113.8, indicating that omicron and high inflation weighed on the minds of Americans early in the new year.

Economists polled by The Wall Street Journal had forecast the index to shrink to 111.7 from a revised 115.2 in December.

Which companies are in focus?
  • Nvidia Corp. NVDA, -3.83% shares fell 3% a news report indicated that the company is preparing to give up on its planned purchase of Arm Ltd. from SoftBank Group Corp.
  • Shares of 3M Co. MMM, -1.27% fell 1.9% after delivering stronger-than-expected earnings.
  • Johnson & Johnson JNJ, +1.58% shares rose 0.9%, after the consumer goods, pharmaceutical and medical device maker posted weaker-than-expected revenue for the fourth quarter.
  • Shares of General Electric Co. GE, -6.61% were down 8%, after the industrial conglomerate reported fourth-quarter free cash flow that topped expectations but saw revenue fall short of forecasts.
  • International Business Machines Corp. IBM, +2.30% late Monday topped earnings and revenue forecasts, but executives declined to provide an earnings outlook. Shares were up 1.6%.
  • American Express Co. AXP, +8.86% shares rose 5.6% after the company topped revenue and earnings expectations for the fourth quarter, citing record levels of spending through its cards.
  • Shares of Raytheon Technologies Corp. RTX, -0.20% were down 1% after the aerospace and defense company reported fourth-quarter profit that beat expectations but revenue that missed, and provided a downbeat full-year outlook.
  • Lockheed Martin Corp. LMT, +1.13% shares were little changed after the aerospace and defense company reported fourth-quarter profit and sales that rose above expectations, with growth in aeronautics, missiles and fire control and rotary and mission systems sales offset a decline in space sales.
What are other assets doing?
  • The yield on the 10-year Treasury note TMUBMUSD10Y, 1.756% rose 2.2 basis points to 1.752%. Yields and debt prices move opposite each other.
  • The ICE U.S. Dollar Index DXY, +0.27%, a measure of the currency against a basket of six major rivals, was up 0.3%.
  • Oil futures CL.1, +1.40% rose, with the U.S. benchmark up 1.4%, while gold futures GC00, +0.28% edged up 0.2%.
  • The Stoxx Europe 600 SXXP, +0.64% rose 0.8%, while London’s FTSE 100 UKX, +0.92% gained 0.9%.
  • The Shanghai Composite SHCOMP, -2.58% fell 2.6%, while the Hang Seng Index HSI, -1.67% shed 1.7% in Hong Kong and Japan’s Nikkei 225 NIK, -1.66% declined 1.7%.

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