Stock market losses grew in afternoon trading Tuesday as investors digested retail earnings, debt-ceiling talks and a megadeal in the tech sector.
The S&P 500 was down 0.4% and appears to be hitting resistance around 4200, a level that's been a persistent barrier for the index. The Nasdaq composite fell 0.5%. But small caps outperformed as the Russell 2000 climbed 1.5%.
The Dow Jones Industrial Average was down 0.1%. Visa gapped down more than 3%, piercing its 50-day moving average. It was the Dow's biggest loser.
Volume was higher on the Nasdaq and the NYSE compared with the same time on Monday. Despite index losses, advancing and declining stocks were nearly even on the NYSE and Nasdaq. That's a positive sign for a stock market that's struggled with weak breadth.
Dow Jones component Apple and Broadcom inked a multibillion-dollar deal. Broadcom will supply Apple with 5G radio frequency components and wireless connectivity hardware.
Broadcom shares climbed more than 2% to an all-time high. Apple stock fell 1.1% but continues to trade above its rising 21-day exponential moving average.
Heico slid nearly 5% in heavy volume, falling below the 177.65 buy point. So far, there's no sell signal for the maker of jet engine components and other electronic devices. Heico beat April-quarter views but warned that lingering supply-chain disruptions may lead to higher costs.
The contractor broke out last week on news that it acquired aircraft parts maker Wencor Group for $1.9 billion.
Las Vegas Sands is another recent breakout running into difficulties. The stock gapped through its 50-day line and is 6% below its 60.40 buy point.
Debt-ceiling talks on Monday ended with some optimism, but a deal remains far from done. The news flow on negotiations was light Tuesday afternoon.
Treasury Secretary Janet Yellen reiterated the U.S. will start to default on June 1 unless Congress raises the federal debt limit.
Stock Market Reacts To Retail Earnings
As another big week for the retail sector unfolds, several major players reported earnings this morning.
Lowe's reversed higher even though the home improvement retailer gave a weak outlook. Like rival and Dow Jones component Home Depot, Lowe's cited a softening market for home improvement. Shares rallied 2.8% and held above the converged 50-day and 200-day moving averages.
Dick's Sporting Goods beat profit expectations and backed its full-year outlook. The stock reversed lower and is testing its 200-day moving average. The relative strength line remains weak.
AutoZone gapped below its 50-day moving average in heavy volume — a sell-off that can be considered a sell signal. While earnings beat estimates, same-store sales came in about half below expectations. AutoZone is on pace for its worst day since May 20, 2022.
BJ's Wholesale Club fell more than 6% to the lowest point since early July. April-quarter sales and earnings missed estimates, according to FactSet.
Yelp Rallies, IBD 50 Falls, PMI Index Jumps
Yelp rallied after activist investor TCS Capital Management urged the review platform to explore strategic alternatives, including a sale. TCS already owns more than 4% of Yelp shares. The stock climbed to the highest level since early November.
The Innovator IBD 50 ETF fell 1.3%. Cybersecurity firm Fortinet fell below its 69.17 buy point.
Homebuilders continued to display unusual weakness.
PulteGroup gapped below its 21-day exponential moving average. Several other homebuilding stocks also fell below their 21-day lines despite good news for the housing market.
New-home sales climbed to 683,000 units in April from a revised 656,000 the previous month. That made it the fifth consecutive month of gains as buyers continued to seek new-construction homes because of low inventory in the resale market, said Kelly Mangold of RCLCO Real Estate Consulting. Would-be sellers are holding on to their low mortgage rates.
In other economic news, the S&P Global Flash purchasing managers index climbed to 54.5 in May from 53.4 in April. Stock market indexes continued to pare losses when the report came out at 9:45 a.m. ET.
"Companies in the U.S. registered a solid upturn in business activity during May," S&P Global said in the report. "Overall growth in output was the fastest for just over a year. The expansion was led by service providers, however, as manufacturers recorded only a slight rise in production."
