The stock market continued to fall on Tuesday as signs of a strong economy stoked fears of more aggressive Fed policy. Consumer confidence and job openings trended higher, reinforcing the notion that the Fed will tighten well into 2023.
The Nasdaq composite lost 1.7% while the S&P 500 is down 1.4%. The Dow Jones Industrial Average slid 1.2%. The small-cap Russell 2000 index is trading 1.6% lower at this hour.
Volume rose on the Nasdaq and the NYSE vs. the same time on Monday.
The 10-year U.S. Treasury yield rose seven basis points to 3.11%. Crude oil prices fell 5% to $91.60 per barrel.
The Innovator IBD 50 ETF plunged 3.9%.
The Conference Board's Consumer Confidence Index increased to 103.2 in August, well above July's 95.3 and the 97.4 consensus forecast by economists.
On top of that, job openings rose 199,000 to 11.24 million in July from 11.04 million in June, upwardly revised from 10.7 million. This blew past the 10.4 million Econoday consensus forecast.
Stock Market: Good News Is Bad News
"There are still roughly two job openings for every one person available to work. So for now, the Fed has more reasons to keep talking tough on its inflation-fighting mandate," said Jeffrey Roach, Chief Economist for LPL Financial.
"The market is right about (Fed Chairman Jerome) Powell's commitment to keep the punch bowl away from the table."
More good news came out of the housing sector, where prices rose more slowly in June. The FHFA House Price Index rose 0.1%, down sharply from 1.3% in May.
The S&P CoreLogic Case-Shiller 20-City House Price Index rose 0.4% in June, down from 1.2% in May, well below the Econoday consensus forecast of 1.1%.
"Recession talk hasn't gone away, but it certainly got a little more quiet lately," said Jennifer Lee, senior economist at BMO Capital Markets.
Markets now see a 70.5% chance of a 75-basis-point hike in September, vs. a 29.5% likelihood the Fed will boost rates by 50 basis points, according to the Cboe Fed Funds Watch tool.
Best Buy, Photronics, Baidu Move On Earnings
Semiconductor equipment supplier Photronics on Tuesday beat Wall Street's targets for its fiscal third quarter. But its guidance for the current quarter came up short. PLAB stock plunged on the news.
Best Buy stock traded more than 2% higher after beating Q2 profit estimates, even though year-over-year comparable sales fell more than 12%. Shares traded above their 50-day line in strong volume.
Chinese search engine Baidu fell more than 7% after beating EPS estimates. Revenue of 29.65 billion yuan (about $4.29 billion) topped estimates of 29.30 billion yuan.
First Solar initially jumped more than 6% this morning but quickly erased those gains. It is trading 0.1% lower. The stock is still close to 11-year highs.
The company will make a $1.2 billion investment in its EV battery plants, following President Joe Biden's Inflation Reduction Act, which encourages domestic production of renewable energy products.
Google And Microsoft Struggle
Google parent Alphabet and Microsoft continued to struggle in Tuesday's stock market, losing more than 1%. Both tech giants are set to close below their 50-day moving averages.
Tesla CEO Elon Musk and Twitter filed opposing documents, adding and disputing recent whistleblower allegations. Musk filed an amended 13D overnight, adding whistleblower allegations to his original request to terminate the $44 billion Twitter acquisition.
His opponent fired back this morning, insisting the "purported additional termination" request is "invalid."
TWTR stock is losing ground on the news, trading below 40, while TSLA stock was down 3% in afternoon trading.
Warren Buffett's Berkshire Hathaway disclosed it sold shares of Chinese EV giant BYD for the first time, sending the stock price sharply lower. Yesterday, BYD reported that Q2 net income nearly tripled vs. a year earlier.
Discount retailer Big Lots gapped up more than 8% after reporting a smaller-than-expected Q2 loss of $2.28 per share. However, revenue fell 7.6% year over year.
Follow Michael Molinski on Twitter @IMmolinski
