U.S. stocks fell Tuesday after a three-day holiday weekend, with rising bond yields taking air out of a recent bounce.
What’s happening
The Dow Jones Industrial Average
DJIA,
-0.70%
was down 228 points, or 0.7%, at 32,984, after falling 461 points at its session low.
The S&P 500
SPX,
-0.74%
was down 27 points, or 0.7%, at 4,131.
The Nasdaq Composite
COMP,
-0.61%
slid 78 points, or 0.6%, to 12,053.
Stocks bounced sharply last week, with the Dow Jones Industrial Average rising 6.2% to snap a run of eight straight weekly losses — its longest since 1932. The S&P 500, which earlier this month came within a whisker of the arbitrary 20% pullback threshold that marks a bear market, rose 6.6% last week for its biggest weekly gain since March 2020, while the Nasdaq Composite, which fell into a bear market earlier this year, rose 6.8%.
What’s driving markets
Heading into the final day of the month, the bounce from recent lows appeared to be stalling.
Analysts said last week’s bounce was technically overdue, coming as the selloff that took the S&P 500 to the brink of a bear market on May 19 left the market stretched to the downside by several measures.
The move to the downside saw steep sector selloffs that ranged from -2.6% for consumer staples to 34.3% for consumer discretionary, while the percentage of subindustries trading below their 50- and 200-day moving averages were more than two standard deviations below their 27-year means, noted Sam Stovall, chief investment strategist at CFRA, in a note. The S&P 500 12-month forward earnings-per-share estimates declined to 16.8 times price — down 1.1% from its 20-plus year average and the lowest reading since April 2020.
“These extremes hinted quite loudly that, like the release of an overstretched rubber band, the market was primed for at least a short-term snapback,” Stovall said. “And snap it did…The only question remaining is whether this rally…
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