US benchmark equity indexes closed lower on Tuesday as markets tracked tariff updates and awaited the official consumer inflation report for February. The Dow Jones Industrial Average fell 1.1% to 41,433.5, while the S&P 500 declined 0.8% to 5,572.1. The Nasdaq Composite slipped 0.2% to 17,436.1. All sectors posted declines, led by industrials.
Canada's Ontario province has agreed to suspend a planned 25% surcharge on electricity exported to three US states as US Commerce Secretary Howard Lutnick agreed to renew trade discussions, Ontario Premier Doug Ford stated. This development reflects ongoing market sensitivities around tariffs, particularly concerning the energy sector.
Furthermore, US President Donald Trump no longer plans to double the proposed steel and aluminum tariffs on Canadian imports, according to top White House trade advisor Peter Navarro. This shift followed threats from Trump to enhance the metals tariffs on Canada in response to Ontario's earlier decision to impose duties on electricity exported to the US.
In other news, US Treasury yields moved higher, with the 10-year rate rising 6.9 basis points to 4.28% and the two-year rate advancing 5.5 basis points to 3.95%. These developments signal a crucial market response as traders adjust their positions ahead of anticipated inflation data. Official figures are expected to reveal on Wednesday that US consumer inflation rose by 0.3% sequentially and 2.9% annually last month, as projected by a Bloomberg-compiled consensus.
These metrics had previously increased by 0.5% and 3% respectively in January. A subsequent producer price report is scheduled for Thursday. Commenting on the inflation landscape, Stifel noted, "After four months of acceleration, a relatively benign February (producer price index and consumer price index reports) should offer welcome calm amid rising fears of upside inflation risks.
While nominally price pressures remain elevated, a resumption of a cooling disinflation trend is likely to furthermore reinforce expectations for at least some further policy easing in the second half of the year." In the realm of small business, optimism in the US declined more than anticipated in February, with uncertainty on Main Street reaching the second-highest reading on record, according to a survey conducted by the National Federation of Independent Business.
Job openings within the US increased to 7.74 million at the end of January, up from 7.51 million the prior month, as reported by the Bureau of Labor Statistics. The consensus projected a level of 7.6 million based on a Bloomberg survey. Turning to commodities, West Texas Intermediate crude oil gained 0.8% to $66.56 a barrel on Tuesday.
However, industry analysts from D.A. Davidson indicated that "gains were capped" due to existing tariff concerns. In individual company updates, Verizon Communications' ($VZ) subscriber growth is anticipated to be "probably soft" in the first quarter, as stated by Chief Revenue Officer Frank Boulben.
The telecommunications giant's shares slumped by 6.6%, marking the steepest decline on the Dow and among the steepest on the S&P 500. Delta Air Lines ($DAL) saw its shares fall by 7.3%, also being among the worst performers on the S&P 500 as the carrier adjusted its first-quarter financial outlook downward.
Conversely, Southwest Airlines ($LUV) shares rose by 8.3% on Tuesday, making it the second-best performer on the S&P 500. The company lowered its first-quarter outlook for a key revenue metric while announcing a policy change to charge certain customers for checked bags. In a notable development, GE Vernova's ($GEV) power conversion and storage business signed a memorandum of understanding with PyroGenesis to initiate discussions towards a multiyear collaboration.
This announcement led to a 5.2% gain in GE Vernova's shares, positioning them among the top gainers on the S&P 500. To round off the day's financial metrics, gold rose by 0.8% to $2,923.1 per troy ounce, while silver experienced a gain of 2.6%, reaching $33.37 per ounce..