Dow sinks nearly 400 points, yields rise to 2024 highs

Live5 updates

• Tue, April 2, 2024 at 10:11 AM EDT

  Job openings steady in February as hiring picks up slighltly

  New data from the Bureau of Labor Statistics released Tuesday. There were 8.76 million jobs open at the end of February, a slight increase from the 8.75 million job openings in January, which was revised lower. Economists surveyed by Bloomberg had expected 8.73 million openings in February.

  The report also showed the quits rate, a sign of confidence among workers, sat at 2.2% for the fourth consecutive month. Additionally, the Job Openings and Labor Turnover Survey (JOLTS) showed 5.8 million hires were made in the month, a slight increase from the 5.7 million seen in January.

  The hiring rate picked up slightly at 3.7% in February, up from the 3.6% rate seen in January.

• 

  Tue, April 2, 2024 at 9:36 AM EDT

  Stocks open lower after yields spike to 2024 highs

  Stocks were lower on Tuesday as bond yields rose for the second-straight day.

  The Dow Jones Industrial Average (^DJI) slipped almost 1%, or over nearly 400 points, setting the blue-chip index back from a bid to reach the key 40,000 level. The S&P 500 (^GSPC) shed 0.8%, while the tech-heavy Nasdaq Composite (^IXIC) fell 1.2%.

  The 10-year Treasury yield (^TNX) popped roughly six basis points to nearly 4.39%, its highest level of 2024. This move comes after a hotter than expected reading on price increases in March’s ISM stoked inflation concerns and sent the 10-year Treasury yield up more than 10 basis points on Monday.

  The 10-year Treasury yield is now at its highest level since November and has surpassed a level Morgan Stanley chief investment officer Mike Wilson recently flagged as critical for stock investors.

  “We view 4.35% on the 10-year US Treasury yield as an important technical level to watch for signs that rate sensitivity may increase for equities,” Wilson wrote in a note on March 17.

  Wilson noted that large caps have been less sensitive to rates recently. “Small caps are likely to show more rate sensitivity than large caps on a move higher in yields,” he said.

  To Wilson’s point, the small cap Russell 2000 index (^RUT) sagged more than 1% in early trade Tuesday.

• 

  Tue, April 2, 2024 at 9:18 AM EDT

  Tesla shares slide after delivery miss

  Tesla (TSLA) stock stumbled in pre-market trading, falling about 7% after the company delivered fewer cars than expected in the first quarter.

  Tesla announced it delivered 386,810 cars in the first quarter, below Wall Street’s estimates for 449,080. This marked the first annual Q1 decline in deliveries since 2020.

• 

  Tue, April 2, 2024 at 7:49 AM EDT

  Consumer stocks in focus with gas prices on the rise

  Stocks levered to the spending of consumers could become ice cold this spring.

  Oil prices hit $85 a barrel this morning, a five-month high. The advance in oil — which may be starting to weigh on the broader market — has lit a fire under nationwide gas prices. The national average for gas prices of $3.51 a gallon last week was unchanged week on week — that after prices rose for four straight weeks.

  Even still, gas prices were up 16 cents from a month ago.

  “While we seem to be nearing a short-term peak, one word of caution for those in the Mid-Atlantic and Northeast: you haven’t yet finished the transition to summer gasoline, so you may experience some sticker shock in a few weeks. Be prepared for somewhat of a punch. For the rest of the nation, so long as we don’t see extenuating circumstances, we’re likely close to a top in prices. Let’s hope it pans out and sticks!” said Patrick De Haan, head of petroleum analysis at GasBuddy in a new blog post.

  As gas prices have risen, the Consumer Discretionary Select Sector SPDR Fund (XLY) has dropped 1.4% the past month – perhaps on fears of consumer spending. Key discretionary retailers in the fund such as Amazon (AMZN), Starbucks (SBUX) and Nike (NKE) have relatively under-performed the S&P 500 in the last month.

  Interestingly, Walmart’s (WMT) stock is up 2% in the past month as investors view the retailer as a trade down play on higher gas prices.

• 

  Tue, April 2, 2024 at 7:30 AM EDT

  Health insurer stocks tank

  Health insurer stocks are being sent to their sickbeds on Tuesday.

  Humana (HUM) is getting drilled by 9% pre-market, with pressure also being seen on UnitedHealth Group (UNH) and Cigna (CI). The sell-offs come as US regulators failed to increase payments for Medicare Advantage plans in line with Wall Street estimates.

  Payments will rise by 3.7% on average in 2025, down about 0.2% year-over-year.

  Long-time healthcare analyst Lisa Gill at JP Morgan said in a client note that came as a “surprise”, as many on the Street expected an increase “given the utilization environment.”

  Humana is seen as the most exposed to the decision from the Centers for Medicare and Medicaid Services.

  Key call-out from Humana’s latest annual report:

  “At December 31, 2023, we provided health insurance coverage under CMS contracts to approximately 5,408,900 individual Medicare Advantage members, including approximately 851,300 members in Florida. These Florida contracts accounted for premiums revenue of approximately $14.9 billion, which represented approximately 19% of our individual Medicare Advantage premiums revenue, or 14% of our consolidated premiums and services revenue for the year ended December 31, 2023.”

  RBC analyst Ben Hendrix said in a note this morning Humana’s profit guidance will have to be reset in the wake of the decision and the stock could stay under pressure. Conversely, Hendrix is recommending to clients to buy Cigna shares on the pullback.