Wall Street stocks sold off on Tuesday as rising Treasury yields piled on pressure and investors got a reminder not to expect a Federal Reserve interest rate cut anytime soon.
The S&P 500 (^GSPC) dropped nearly 1.4%, while the Dow Jones Industrial Average (^DJI) tumbled about 1.3%, or over 425 points. The tech-heavy Nasdaq Composite (^IXIC) was down nearly 2% after closing with a gain on Monday.
The moves sent the Dow into negative territory for the year, as it closed just above the 33,000 level.
Hawkish comments by Fed policymakers reminded investors that resilience in the US economy likely means borrowing costs will stay higher for longer. Traders are now pricing in odds of 29% that policymakers will hike rates at their November meeting, compared with 16% a week ago, according to the CME's FedWatch tool.
That prospect helped 10-year (^TNX) and 30-year Treasury yields (^TYX) rise to 16-year highs on Tuesday — a selloff in bonds that, combined with surges in oil prices and the dollar, has dampened appetite for stocks. The 10-year yield touched 4.8%.
In other economic news, the number of open jobs in the US increased in August, raising questions of whether the job market is cooling fast enough to appease the Federal Reserve. The latest Job Opening and Labor Turnover Survey, or JOLTS report, released Tuesday revealed there were 9.6 million jobs open at the end of August, an increase from the 8.83 million job openings in July. Economists surveyed by Bloomberg had expected there were 8.82 million openings in July.
The JOLTS report comes ahead of the highly anticipated September US jobs report on Friday.
Netflix to raise streaming prices: Report
Streaming prices have ballooned across the board with Netflix (NFLX) the latest platform that will reportedly raise prices as profitability and engagement becomes top of mind for media companies.
On Tuesday, The Wall Street Journal reported Netflix plans to raise the price of its ad-free streaming tier following the conclusion of the ongoing actors' strike. The company declined to comment on the report when asked by Yahoo Finance.
SAG-AFTRA, the union that represents approximately 160,000 actors, announcers, recording artists, and other media professionals around the world, is currently engaged in contract negotiations with studios and a deal could be imminent.
The writers union, Writers Guild of America (WGA), struck a deal last week after a nearly 150 day strike that brought the industry to a halt. The guild was successful in achieving many of its demands, which included increased regulations surrounding the use of artificial intelligence, minimum staffing requirements, a boost to streaming residuals, wage increases, and more.
Those new deal terms add even more pressure for studios to improve their balance sheets at a time when revenue initiatives like ad-supported tiers and password sharing crackdowns have become the industry norm while price increases have been utilized to improve average revenue per user, or ARPU — a key profitability metric.
Although the Journal said the timeline for a potential Netflix price hike and the amount by which the monthly $15.49 plan would increase by is still unknown, the rumored increase echoes parallel moves from other competitors.
Warner Bros. Discovery announced a $2 price increase to its Discovery+ ad-free plan on Tuesday while Disney will raise the prices of its ad-free versions of Disney+, Hulu and ESPN+ plans by more than 20% next week.
Jerome Powell is on Instagram
The Fed now has an Instagram. And a Threads.
As Yahoo Finance's Josh Schafer reports:
The Federal Reserve launched accounts on Meta's Instagram and Threads on Monday with the central bank's chairman appearing on camera for the first post. The goal of the accounts is to increase the "accessibility and availability of Board news and educational content," according to a press release.
“Hi, I’m Jay Powell, I’m the chair of the Federal Reserve," Powell said in the Fed's first Instagram post Monday.
He continued: "The Fed is America's central bank working to promote a healthy economy and a strong financial system. That mission starts with you. "
The Fed hopes the new accounts will provide Americans resources on how Fed decisions impact the economy. The Fed has already been on X, formerly known as Twitter, where it often tweets out press releases surrounding monetary policy, personal finance tips, and photos.
Tesla unveils its cheapest SUV
Tesla (TSLA) shares dropped about 1.5% on Tuesday, echoing the broader markets, after the EV maker introduced a cheaper new version of its popular Model Y SUV.
As Yahoo Finance's Pras Subramanian reports:
Tesla now lists on its US website the Model Y RWD (rear-wheel drive) model, which is a version of the Model Y with a single motor powering its rear axle. Tesla estimates the Model Y RWD will have 260 miles of range and cost $43,990. Prior to the RWD version, Tesla had a base Model Y AWD (all-wheel drive) that cost $47,490, or $3,500 more than this new RWD version.
The new variant will likely be powered by cheaper LFP (lithium iron phosphate) batteries, which have shorter range but longer battery life compared to NMC (nickel manganese cobalt) batteries. Tesla says the new RWD also qualifies for the full $7,500 federal EV tax credit, meaning this version could be had for as little as $36,490 if the buyers meet income requirements. Buyers' AGI (adjusted gross income) shouldn't exceed $150,000 for a single person or $300,000 for joint filers/married people.
The introduction of a new Model Y comes as Tesla’s global sales missed analyst expectations for the third quarter. Tesla said it delivered 435,059 vehicles globally, of which approximately 419,000 were Model Y and Model 3 vehicles and around 16,000 were higher-priced Model X and Model S cars. Wall Street consensus estimates had deliveries pegged at 456,722.
Sam Bankman-Fried trial begins
The criminal trial of FTX founder Sam Bankman-Fried kicked off with jury selection in Manhattan on Tuesday.
As Yahoo Finance's Alexis Keenan reports:
The trial will decide whether the 31-year-old entrepreneur embezzled billions in customer funds to prop up his ailing crypto hedge fund, committed money laundering, and misled investors and lenders. Bankman-Fried has pleaded not guilty to the charges.
He also faces a separate set of criminal charges in another trial scheduled to begin in March. Convictions on all counts could mean a sentence of more than 100 years in federal prison.
The legal standoff that begins Tuesday inside a New York City courtroom is expected to expose the murky details of FTX’s 2022 collapse, a sudden unraveling that rattled the financial world and punctured the confidence of investors who had bet big on digital assets.
Stocks bounce off lows
Stocks somewhat recovered from their lows in midday trading as investors digested fresh comments from Cleveland Fed President Loretta Mester.
Stocks fall on Fed speak
Stocks took another leg down after Cleveland Fed President Loretta Mester said Tuesday she is likely to favor a rate hike at the next meeting if the current economic situation holds.
The Dow Jones Industrial Average (^DJI) fell more than 400 points, or 1.26%, while the S&P 500 (^GSPC) sank 1.5%. The tech-heavy Nasdaq Composite (^IXIC) dropped 1.8%. Mester said the Federal Reserve is likely at or near its peak interest rate target and expects to hit 2% inflation by the end of 2025.
Stocks trending in morning trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in morning trading on Tuesday:
Plug Power (PLUG): Shares fell 5% after Truist Financial cut its price target on the stock to $8 a share from the prior $9. The stock also moved lower on fears higher for longer interest rates will further hit energy-related stocks.
McCormick (MKC): Shares were down nearly 9% after the company reported a year-over-year drop in quarterly profit. The stock is on track for its lowest close since March 2020.
Job openings increase in August
The number of open jobs in the US increased in August, raising questions of whether the job market is cooling fast enough to appease the Federal Reserve as the central bank considers more interest rate hikes to combat inflation.
The latest Job Opening and Labor Turnover Survey, or JOLTS report, released Tuesday revealed there were 9.6 million jobs open at the end of August, an increase from the 8.83 million job openings in July. Economists surveyed by Bloomberg had expected there were 8.82 million openings in July.
The report also showed a decline in the quits rate, which is closely watched by economists as elevated quits are seen as a sign of confidence among workers. In August, the quits rate was unchanged at 2.3%, the lowest since January 2021. The JOLTS report showed 5.9 million hires were made in the month, a slight uptick from the 5.8 made last month.
The news sent stocks lower.
The the tech-heavy Nasdaq Composite (^IXIC) was the biggest laggard of the early morning session, down 1.4%. The Dow Jones Industrial Average (^DJI) fell 0.8%, or more than 250 points, while the S&P 500 (^GSPC) sank nearly 1.0%.