By Daniel Shvartsman
Investing.com -- Markets dropped after a promising start to the day, as risk assets suffered on Tuesday amidst signs that oil's high price is stabilizing and that the Fed is not interested in slowing down.
The S&P 500 dropped 2% on the day to 3822, while the Dow Jones Industrial Average dropped 1.6%. The Nasdaq Composite took the biggest hit, dropping 3%, a sign that the concerns of inflation and lagging growth predominated in Tuesday trading.
One of the blows to bullish hopes was cold water from the Fed in the form of pledges to continue to curb inflation. In an interview on LinkedIn, San Francisco Fed President Mary Daly said, "Many are worried that the Fed might be acting too aggressively and maybe tip the economy into recession. I am myself worried that left unbridled, inflation would be a major constraint and threat to the U.S economy and continued expansion." New York Federal Reserve Bank President John Williams and St. Louis Fed President James Bullard echoed those statements in separate interviews.
As a reminder of that potentially unbridled inflation, both crude oil and Brent oil closed up over 2% today. The commodity jumped on reports that gulf oil producers are near "max outputs", meaning no supply side solution is poised to come to the rescue.
And while consumer confidence surveys have come into some question among market participants, the Conference Board consumer survey missed expectations and set a 15-month low, dating back to pre-Covid vaccine rollouts in the U.S., a reminder of how inflation is weighing on sentiment.
Nike (NYSE:NKE) was among the big losers, down nearly 7% after posting earnings that were received negatively in what Morgan Stanley called a "reset quarter". Etsy (NASDAQ:ETSY) had a second consecutive big losing day, down 8.2%, while semiconductor company Advanced Micro Devices Inc (NASDAQ:AMD) dropped 6.2%.
Energy stocks were the leaders for a second consecutive day, with Hess (NYSE:HES) up 5.6% to lead the S&P 500. Occidental Petroleum (NYSE:OXY) moved 4.8% higher after news broke of Warren Buffett's firm Berkshire Hathaway (NYSE:BRKa) continuing to add to its position in Occidental, taking its position to over 16% of the oil company.
WideOpenWest Inc (NYSE:WOW) rose 2% on reports that another infrastructure firm, Global Infrastructure Partners, was considering a bid for the company, some weeks after Morgan Stanley Infrastructure Partners was reported to be in talks with the cable company.
Cryptocurrencies joined the general risk-off sentiment, with Bitcoin down 2.9% to $20,260 as of 4pm ET, and Ethereum down 3.3%. The United States 10-Year was just about flat, down 7 basis points on the day to 3.187, while the EUR/USD dropped 0.53% to 1.0527.