So much for that early rally. U.S. stocks drifted lower by midday Tuesday, with the S&P 500 and Nasdaq 100 easing back from the near-record highs they hit earlier in the session. It turns out a fresh surge in crude oil prices and some pointed comments from the likely next Fed chair were enough to put a damper on the April rally.
The mood shifted as traders found themselves stuck in an uneasy middle ground. Pakistan's information minister said they were still waiting for a formal response from Iran about whether it would send a delegation to peace talks in Islamabad. So you've got the potential for a diplomatic breakthrough on one side, and the risk of a re-escalation in the critical Strait of Hormuz on the other. The market doesn't love uncertainty, and it showed.
WTI crude oil climbed 2.7% to around $90 a barrel, while Brent rose 2.5% to $97.80. That's a big move, and it rippled through everything.
The S&P 500 slipped 0.3% to 7,091, while the Dow Jones Industrial Average gave up 90 points, or 0.2%, to 49,352. The CBOE Volatility Index, a gauge of market fear, climbed 5.4% to 19.89, reflecting a modest bid for protection as the session's risk appetite deteriorated.
The Nasdaq 100 held up a bit better, shedding just 0.1% to 26,567, as strength in software and semiconductors helped offset weakness elsewhere.
Looking at the so-called Magnificent Seven, it was a mixed bag. Amazon.com Inc. (AMZN) rose about 2% after pledging more than $20 billion in additional investment in AI start-up Anthropic. Meanwhile, Apple Inc. (AAPL) slid more than 2% after announcing that hardware chief John Ternus will succeed Tim Cook as CEO in December. Tesla Inc. (TSLA) dropped about 1% heading into its earnings release on Wednesday, and NVIDIA Corp. (NVDA) eased about 0.7%.
The Russell 2000 was the weakest corner of the market, dropping 0.5% to 2,780 as regional banks and transportation names dragged small caps broadly lower.
Then there was the other macro story of the day, unfolding on Capitol Hill. Fed Chair nominee Kevin Warsh opened his confirmation hearing with some unusually pointed prepared remarks. He told senators the central bank "needs new tools and new communications," and called for "a regime change in the conduct of Fed policy" alongside a "new inflation framework." That's not the kind of language that typically calms markets.
The 10-year Treasury yield advanced roughly four basis points to 4.29%, with the two-year yield rising about six basis points to 3.78%. The move came after data showed U.S. retail sales jumped 1.7% in March—the biggest monthly gain since January 2023—and a separate report showed a sharp pickup in private payrolls, underscoring the resilience of the U.S. consumer.
Precious metals sold off sharply in this environment. Spot gold fell 1.7% to $4,738 an ounce, while silver fell 4% to $76 an ounce.
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