U.S. Stocks Move Sharply Lower Ahead Of Powell Testimony

(RTTNews) - Following the modest pullback seen during the previous session, stocks showed a more substantial move to the downside during trading on Tuesday. The major averages all moved notably lower, with the tech-heavy Nasdaq showing a particularly steep drop.

The major averages climbed off their worst levels going into the close but remained firmly negative. The Nasdaq plunged 267.92 points or 1.7 percent to 15,939.59, the S&P 500 tumbled 52.30 points or 1.0 percent to 5,078.65 and the Dow slumped 404.64 points or 1.0 percent to 38,585.19.

The weakness on Wall Street came as traders continued to cash in on recent strength in the markets, which lifted the S&P 500 and the Nasdaq to record closing highs last Friday.

Uncertainty about the outlook for interest rates also weighed on the markets ahead of congressional testimony by Federal Reserve Chair Jerome Powell

Powell is due to testify before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.

The Fed chief is likely to reiterate recent comments stressing the central bank needs greater confidence inflation is slowing before cutting interest rates.

The next monetary policy meeting is scheduled for March 19-20, with the Fed widely expected to leave interest rates unchanged.

In U.S. economic news, a report released by the Institute for Supply Management showed U.S. service sector growth slowed by slightly more than expected in the month of February.

The ISM said its services PMI fell to 52.6 in February after climbing to 53.4 in January. While a reading above 50 still indicates growth, economists had expected the index to show a more modest decrease to 53.0.

The Commerce Department also released a report showing a steep drop in new orders for U.S. manufactured goods in the month of January.

Sector News

Software stocks showed a substantial move to the downside on the day, resulting in a 3.4 percent nosedive by the Dow Jones U.S. Software Index down.

Among software stocks, GitLab (GTLB) plummeted by 21.0 percent after the company reported better than expected fourth quarter results but provided disappointing guidance.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.1 percent slump by the Philadelphia Semiconductor Index.

Commercial real estate, housing and transportation stocks also saw notable weakness, while banking stocks showed a strong move to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index closed just below the unchanged line, while Hong Kong's Hang Seng Index plunged by 2.6 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the German DAX Index edged down by 0.1 percent and the French CAC 40 Index fell by 0.3 percent.

In the bond market, treasuries moved notably higher, more than offsetting the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.2 basis points to 4.137 percent.

Looking Ahead

Powell's congressional testimony is likely to be in the spotlight on Wednesday, although reports on private sector employment and job openings are also likely to attract attention along with the Fed's Beige Book.