A rally that drove stocks to all-time highs hit a wall and bond yields rose as an unexpected increase in job openings dimmed the outlook for Federal Reserve rate cuts, with Chair Jerome Powell reiterating his wait-and-see stance amid the threat of tariffs.
Following back-to-back record closes, the S&P 500 fell. That’s after the gauge hit its most-overbought level in a year. Tech bore the brunt of the selling, with a gauge of the “Magnificent Seven” megacaps down 1.2%. Tesla Inc. sank 4.5% as President Donald Trump threatened to withdraw subsidies from Elon Musk’s companies and examine the billionaire’s immigration status.
S&P 500 halts rally.
Short-dated Treasuries, which are more sensitive to imminent Fed moves, underperformed longer maturities. The dollar halted a slide that drove the currency to the weakest since 2022.
US job openings hit the highest since November, largely fueled by leisure and hospitality, and layoffs declined. Powell and other policymakers have consistently characterized labor-market conditions as strong in recent weeks.
“As long as the labor market remains solid, the US economy can continue to chug ahead, while helping reduce the risk of stagflation” said Bret Kenwell at eToro. “It would also buy the Fed more breathing room when it comes to interest rates.”
Speaking Tuesday during a panel in Portugal, Powell repeated that the central bank probably would have cut rates further this year absent Trump’s expanded use of tariffs. Still, when asked if July were too soon for a rate cut, Powell didn’t rule out the possibility.
Meantime, Trump’s $3.3 trillion tax and spending cut bill passed the Senate after a push by Republican leaders to persuade holdouts to back the legislation.
The government’s June employment report, due Thursday, is expected to a show a slowdown in nonfarm payroll growth and an uptick in the unemployment rate.
“Federal Reserve interest-rate policy is likely on hold for now,” said Josh Hirt at Vanguard. “If the labor market remains on the trajectory we expect, the Fed can afford to be patient. We anticipate the Fed will be able to make two more rate cuts later this year in this environment.”
A July rate cut is viewed as a long shot, but swap contracts assign it about 15% odds versus near zero last mont. A quarter-point cut is fully priced in for September.
Separate data Tuesday showed US factory activity contracted in June for a fourth consecutive month as orders and employment shrank at a faster pace, extending the malaise in manufacturing.
“While the hit to manufacturing activity from tariffs so far appears to have been limited, the further small rise in the prices paid index last month adds to evidence that firms are facing higher costs as a result,” said Thomas Ryan at Capital Economics.
Corporate Highlights:
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Shares for solar companies rose on Tuesday on the Senate’s decision to remove an excise tax on wind and solar projects from President Donald Trump’s tax and spending bill.
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Tesla Inc. Chief Executive Officer Elon Musk has assumed oversight of sales in Europe and the US, leaving deputy and senior vice president Tom Zhu over Asia, following the high profile departure of Omead Afshar, people familiar with the matter said.
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Boeing Co. said Stephen Parker will oversee the defense, space and security unit on a permanent basis, as Chief Executive Officer Kelly Ortberg molds his top leadership team, including the appointment of a new chief financial officer.
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Ford Motor Co.’s electric vehicle sales plunged 31.4% in the second quarter after the automaker ordered dealers not to sell its battery-powered Mustang Mach-e model due to a safety flaw that could lock occupants in the car.
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UnitedHealth Group Inc. and Memorial Sloan Kettering Cancer Center resolved a contract dispute that threatened to interrupt treatment for thousands of cancer patients in the New York City area.
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AMC Entertainment Holdings Inc. said it reached an agreement with a majority of bondholders to end litigation that resulted from the movie theater chain’s debt restructuring last year.
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Wolfspeed Inc., a chipmaker caught in President Donald Trump’s push to reshape Biden-era tech subsidies, filed bankruptcy to enact a creditor-backed plan to slash $4.6 billion in debt.
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Macau’s monthly gaming revenue rose 19% in June, exceeding analyst expectations as visitors poured in to the world’s biggest gambling hub for Cantonese pop concerts and other entertainment offerings.
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AstraZeneca Plc’s Chief Executive Officer Pascal Soriot wants to move the drugmaker’s stock listing to the US, the Times reported, in what would be another sign of the UK’s waning status as a magnet for global capital.
Some of the main moves in markets:
Stocks
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The S&P 500 fell 0.2% as of 1:04 p.m. New York time
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The Nasdaq 100 fell 0.8%
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The Dow Jones Industrial Average rose 0.7%
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The MSCI World Index fell 0.2%
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Bloomberg Magnificent 7 Total Return Index fell 1.2%
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The Russell 2000 Index rose 1.1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.2% to $1.1768
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The British pound was little changed at $1.3723
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The Japanese yen rose 0.2% to 143.72 per dollar
Cryptocurrencies
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Bitcoin fell 1.5% to $105,991.87
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Ether fell 3.3% to $2,420.95
Bonds
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The yield on 10-year Treasuries advanced three basis points to 4.26%
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Germany’s 10-year yield declined three basis points to 2.57%
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Britain’s 10-year yield declined three basis points to 4.45%
Commodities
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West Texas Intermediate crude rose 0.8% to $65.64 a barrel
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Spot gold rose 1.2% to $3,341.69 an ounce
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