In the latest trading session on Tuesday, US equity indexes experienced a decline, effectively curbing the strong upward momentum observed in recent weeks as volatility surged and government bond yields fell sharply. The S&P 500 index dipped 0.3% to reach a level of 5,593.2, while the Nasdaq Composite slid by 0.5%, settling at 17,796.1.
The Dow Jones Industrial Average also echoed this downturn, dropping 0.2% to close at 40,825.7. Among the sectors, Energy emerged as the most significant decliner, experiencing a downturn of 2.3%. Conversely, Healthcare and consumer staples demonstrated resilience by posting gains during the session. Remarkably, last week marked the best performance for the S&P 500 in 2023, with the other major indexes aiming for previously established record highs.
Notably, Jim Reid, who heads global fundamental credit strategy at Deutsche Bank, highlighted a remarkable statistic: the equal-weighted S&P 500 reached an all-time high, which underscores the broad-based recovery within the market. Interestingly, the VIX index, which measures market volatility, had also fallen to a one-month low by the end of the previous week. On the volatility front, the CBOE Volatility Index (VIX) encountered a significant rebound, soaring 6.2% to close at 15.71.
This increase followed a steep decline last week, where it plummeted from an intraday record level of 65.7. Historical data from the Wells Fargo Investment Institute reveals that the VIX has only surpassed this peak on two occasions in the last 35 years: during the financial crisis and the COVID-19 pandemic. UBS noted that the volatility index has recently hit two remarkable milestones: it achieved the fastest increase of more than 25 points from market lows and the quickest retracement from that spike recorded in financial history. In a significant development on Tuesday, Treasury yields saw a decrease.
The 10-year yield fell by 4.3 basis points to reach 3.82%, while the two-year yield decreased by 6.8 basis points to settle at 4%. These declining government bond yields could raise concerns among investors, especially as they coincide with the recent spike in volatility. Events were also scheduled featuring Atlanta Fed President Raphael Bostic and Federal Reserve Vice Chair for Supervision Michael Barr, contributing to ongoing discussions surrounding monetary policy. Turning to corporate news, Palo Alto Networks ($PANW) surprised analysts with an unexpected increase in fiscal Q4 earnings, driven by stronger-than-anticipated revenue figures reported late Monday.
As a result, shares of the cybersecurity firm surged 8.2% during the intraday session, positioning it as a leader on both the S&P 500 and Nasdaq indexes. In contrast, Estee Lauder ($EL.US) reported mixed results for its fiscal Q4, with profits exceeding expectations; however, guidance for fiscal 2025 fell short of consensus targets according to an RBC Capital Markets report released on Tuesday.
Concerns about growth factors, particularly in the Chinese market, contributed to a drop in Estee Lauder's shares, which slumped 4.8% intraday, making it one of the worst performers within the S&P 500. The West Texas Intermediate crude experienced a marginal decline of 0.4%, landing at $74.05 per barrel.
Analysts at Norway's Rystad Energy commented on the oil market’s prevailing weak conditions, noting that an increasingly likely ceasefire in Gaza, coupled with a lack of recovery in Chinese demand, continues to present challenges. They warned that without a turnaround in market fundamentals soon, OPEC+ may be reluctant to dismantle their voluntary production cuts in the near term. Meanwhile, gold has seen a slight uptick, rising 0.2% to reach $2,546.80 an ounce, while silver gained 0.6%, reaching $29.91.
These movements in precious metals further reflect the underlying trends in investor behaviors amid fluctuating financial landscapes..