Dow falls over 500 points as Wall Street struggles with economic data

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Dow falls over 500 points as Wall Street struggles with economic data

U.S. stocks fell on Tuesday, erasing earlier gains as the market didn't keep its rebound from the bear market lows.

The Dow Jones Industrial Average fell by 491.27 points, or 1.56%, to 30,946. The S&P 500 dropped 2.01% to 3,821. The Nasdaq Composite was down 3% to 11,181 and the 55 was the laggard. The Dow was up as much as 446.83 points, or 1.4%, at one point. The S&P 500 and Nasdaq gained as much as 1.2% and 1%. After the release of disappointing economic data, the major averages reversed those gains.

The consumer confidence index fell to 98.7, a reading of 103.2 in May and missing a Dow Jones estimate of 100, according to The Conference Board. The Federal Reserve is trying to combat a surge in inflation with aggressive rate hikes, so the data was weakened by the lack of a recession.

The consumer confidence survey, which was the highest level in data going back to August 1987, had 8% inflation expectations for the month of June, the highest level since August 1987, according to the Conference Board.

Consumer confidence and financial conditions, particularly interest rates, indicate a slowdown ahead, according to Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. If we are able to avoid a recession then the stock market is fairly valued, but if we do go into recession, we would expect the lows for the year haven't been hit yet. Wall Street was coming off of modest losses from the previous session. The investors are still searching for a market bottom and hoping last week's rally sticks, but there doesn't seem to be a clear catalyst for a meaningful rebound.

Chris Verrone, technical analyst with Strategas said that one of the trickier calls in the business is to evaluate the difference between a bounce in a bear market and the start of a more durable advance. The current bounce, 8% over the last 4 trading days, has been impressive on the surface as most moves of this context tend to be, but has yet to signal any resounding internal or leadership improvement. Retail stocks fell after the consumer confidence data was released. Lowe's stock fell 5.2%, while Home Depot and Macy's lost more than 4%. The SPDR S&P Retail ETF was down by 3.7%.

The sportswear company issued weaker-than-expected revenue guidance for the current quarter, but the shares of Nike fell 7%. Nike said it sees no revenue for the first quarter, compared to the previous year, and low double-digit revenue for 2023 on a currency-neutral basis, as it continues to manage Covid disruption in Greater China.

Chip stocks fell sharply, with Nvidia down 5.3% and Advanced Micro Devices down 6.2%. Marvel fell 4.9%. After an analyst predicted that Apple will use its modems for the 2023 iPhone, Qualcomm added 3.5%.

On Tuesday, China relaxed its Covid restrictions for inbound travelers, reducing their quarantine time on arrival by half to seven days. Travel and casino stocks went up after that. Wynn Resorts and Las Vegas Sands rose by 3.2% and 4%. Airlines initially moved higher, but gave back gains as the market turned negative.

After the company announced that Shanghai Disneyland will reopen this week, Disney shares got a lift after the news was first made public. The shares fell with the rest of the market.