US stocks fell sharply in late-afternoon trading Tuesday, placing the market on course for its worst day since August and its first two-day losing streak in more than a month. Health care and technology stocks accounted for much of the decline. Banks, industrial companies and energy stocks also racked up hefty losses. Bond prices fell, sending yields to their highest level since April 2014.
KEEPING SCORE: The Standard & Poor’s 500 index fell 24 points, or 0.9 percent, to 2,828 as of 3:40 p.m. Eastern Time. The Dow Jones industrial average slumped 306 points, or 1.2 percent, to 26,132. That’s the Dow’s biggest single-day drop since May. The Nasdaq lost 52 points, or 0.7 percent, to 7,414. The Russell 2000 index of smaller-company stocks gave up 14 points, or 0.9 percent, to 1,583. The market’s last two-day losing streak was in late December.
THE QUOTE: “This was a market that was overbought and it was vulnerable to something pulling it back,” said Quincy Krosby, chief market strategist at Prudential Financial. “That said, we’re in the heaviest part of earnings season this week and we expect to see the majority of the reports coming out to be positive. That could be the catalyst to have buyers come in.”
BUSY WEEK: The sell-off comes during a week with no shortage of potential market-moving corporate news and economic data. Several big-name companies are due to report quarterly results on Wednesday and Thursday, including Apple, Amazon, Microsoft, Facebook and Google’s parent company Alphabet. Also on investors’ radar: Tuesday night’s State of the Union address and a two-day meeting of the Federal Reserve’s policymaking committee that wraps up Wednesday.
HEALTH SCARE: Health care sector companies slumped on news that Amazon is teaming up with Warren Buffett’s Berkshire Hathaway and JPMorgan Chase to create a company that helps their U.S. employees find quality care at a reasonable cost. The venture, whose initial focus would be on developing technology, is in its early planning stage. Express Scripts slid $2.88, or 3.5 percent, to $79.04. Cigna tumbled $16.49, or 7.4 percent, to $207.41. UnitedHealth Group lost $10.69, or 4.3 percent, to $236.72. Anthem fell $14.15, or 5.5 percent, to $242.87.
HCA bucked the trend after the hospital chain posted better fourth-quarter results than analysts had expected. The stock gained $4.21, or 4.3 percent, to $101.84.
TECH SLIDE: A sell-off in technology shares continued in early trading Tuesday. Corning lost $1.70, or 5 percent, to $32.55.
QUEASY RIDER: Harley-Davidson tumbled 6.7 percent after the motorcycle manufacturer said shipments will decline again this year. The company also plans to close a plant in Kansas City, Missouri. The stock gave up $3.68 to $51.61.
SOFTWARE BUYOUT: Callidus Software jumped 10 percent after the business software company agreed to be bought by SAP for $36 a share, or $2.53 billion. Callidus’ shares added $3.27 to $35.98.
ECONOMIC DATA: The Conference Board said Tuesday its index of consumer confidence rose to 125.4 in January from a revised 123.1 in December. Meanwhile, a national housing index showed that home prices rose a sharply in November, lifted by a shortage of homes on the market.
BOND YIELDS: Bond prices fell. The yield on the 10-year Treasury rose to 2.72 percent from 2.70 percent late Monday. That’s the highest the rate has been since April 2014. The yield was as low as 2.04 percent last September. Bond yields have been moving steadily higher over the past few months, making bonds more appealing to investors seeking income. Rising yields also push up mortgage rates and other borrowing costs.
“With the 10-year rate shooting above 2.7 percent, the cost of capital for equity investments also just increased,” said Alexandra Coupe, associated director for Pacific Alternative Asset Management Co. “Investors are stepping back and reevaluating if their holdings can surpass this revised hurdle.”
ENERGY: Benchmark U.S. crude slid $1.06, or 1.6 percent, to settle at $64.50 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, dropped 44 cents, or 0.6 percent, to close at $69.02 a barrel in London. Wholesale gasoline fell 4 cents to $1.90 a gallon. Heating oil gave up 3 cents to $2.07 a gallon. Natural gas rose 13 cents, or 3.6 percent, to $3.63 per 1,000 cubic feet.
The slide in oil prices weighed on energy stocks. Noble Energy fell $1.75, or 5.4 percent, at $30.38.
METALS: Gold fell $4.90 to $1,335.40 an ounce. Silver dropped 7 cents to $17.06 an ounce. Copper slipped 1 cent to $3.19 a pound.
CURRENCIES: The dollar, which fell sharply last week, declined to 108.78 yen from 108.94 yen late Monday. The euro rose to $1.2404 from $1.2389.
BITCOIN: The price of bitcoin fell 10.4 percent to $9,998, according to the tracking site CoinDesk. Bitcoin futures on the Cboe Futures Exchange slumped 9.1 percent to $10,150.
MARKETS OVERSEAS: Major indexes in Europe declined amid investor worries that new data showing the eurozone grew in 2017 at its fastest pace in a decade could prompt the European Central Bank to wind down its monetary stimulus program earlier than expected.
The DAX in Germany lost 1 percent, while the CAC 40 in France fell 0.9 percent. Britain’s FTSE 100 gave up 1.1 percent. Indexes in Asia closed lower. Japan’s Nikkei 225 index lost 1.4 percent, while Hong Kong’s Hang Seng dropped 1.1 percent. South Korea’s Kospi sank 1.2 percent.