By Yasin Ebrahim
Investing.com – The S&P 500 slumped Tuesday, unable to mark its one-year bull run in style as fresh lockdowns in Europe muddied the outlook for global economic growth, souring investor appetite for cyclical stocks.
The S&P 500 was down 0.74%, and has rebounded about 70% higher since March 23. The Dow Jones Industrial Average fell 0.94%, or 268 points, the Nasdaq Composite was down 1.12%.
Europe is facing a third wave of Covid-19 that has forced major countries in the bloc including Germany, France and the Netherlands to batten down the hatches with fresh lockdown into easter that will likely set global growth back.
The risk of slower global growth led to a 6% rout in oil prices on bets the recovery in travel-related demand may not return as fast as many expect.
Nov (NYSE:NOV), Halliburton (NYSE:HAL) and Marathon Oil (NYSE:MRO) were among the biggest decliners with the latter down 6%.
The reopening trade – bullish bets on stocks tied to the progress of the economic reopening – was also scaled back with airlines and cruise lines closing in the red.
United Airlines Holdings (NASDAQ:UAL), American Airlines Group (NASDAQ:AAL), Carnival (NYSE:CCL) and Norwegian Cruise (NYSE:NCLH) were sharply lower.
Supportive remarks from Federal Reserve chair Jerome Powell and U.S. Treasury Secretary Janet Yellen provided little reprieve for the broader market.
Powell shrugged off inflationary pressure and continued to back the Fed's accommodate monetary policy stance, saying the rise in price pressures this year will likely be a "one-off."
The U.S. 10-year yield remained at one-week lows near 1.65%, though it had dipped to the 1.30%-to-1.40% level of support.
Powell's doubling down on lower for longer monetary policy comes just a day after more hawkish members of the Federal Open Market Committee, the fed's rate setting arm, signaled that the first rate could hike could come sooner than 2024.
Dallas Federal Reserve President Robert Kaplan, a non-voting FOMC member, told CNBC Tuesday that he was one of four Fed officials who backed first benchmark rate hike next year at the Fed’s policy meeting last week.
The move lower in rates kept the bulk of megacap tech stocks above the flatline.
Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) were lower, while Google-parent Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), and Amazon.com (NASDAQ:AMZN) ended in the green.
On the economic front, housing market activity continued to ease as new home sales fell by a more-than-expected 18.2% to 775,000 units in February.
"[R]ising mortgage rates and rising materials costs could push more first-time buyers out of the market," Yelena Maleyev, an economist at Grant Thornton said.
In other news, AstraZeneca (NASDAQ:AZN) fell after the U.S. National Institute of Allergy and Infectious Diseases said the company may have included "outdated information" in its Covid-19 vaccine trial. AstraZeneca said it would published more data on its U.S. clinical trial within 48 hours.