Stocks Slip as Investors Face Gut Check on Rally: Markets Wrap

Stocks edged down on Tuesday as the second-quarter rally met resistance from economic headwinds and signs of stretched positioning.

(Bloomberg) — Stocks edged down on Tuesday as the second-quarter rally met resistance from economic headwinds and signs of stretched positioning.

US equities ticked lower after the S&P 500 Index touched a 14-month high last week. Nike Inc. fell on inventory concerns while PayPal Holdings Inc. climbed after reaching a loan accord with KKR & Co. Miners and automakers declined in Europe. 

Investors caught between fear of missing out and concerns markets have run too far, too fast are contending with overblown valuations and economic headwinds. Bullish positioning in US equity futures grew last week, taking it to the most extended levels for the S&P 500 and Nasdaq 100 in data going back to 2010, according to Citigroup strategists.

“In the short run, six to 12 months, we are navigating treacherous waters,” Sebastien Page, chief investment officer at T Rowe Price, told Bloomberg Television. Growth stocks — particularly those in the tech sector — have been driven by a range of factors, including “positive surprises” on revenues and advertising as well as excitement for artificial intelligence, he added. “That’s all part of the value versus growth equation.”

The path of US monetary policy is another wild card. Federal Reserve Chair Jerome Powell will give his semi-annual report to Congress on Wednesday. Policymakers at the Fed kept interest rates unchanged at their latest meeting but warned of more tightening ahead. Investors also await the outcome of policy meetings in Turkey, the UK and Switzerland.

The Fed decision last week came with forecasts for higher borrowing costs of 5.6% in 2023, implying two additional quarter-point rate hikes or one half-point increase before the end of the year. 

That contrasts with market pricing for some 20 basis points of tightening in the remainder of the year.

“We find it hard to get on board with the current excitement,” Morgan Stanley strategists led by Michael Wilson wrote in a note Tuesday. “If second half growth re-accelerates as expected, then the bullish narrative being used to support equity prices will be proven correct. If not, many investors may be in for a rude awakening.”

In a choppy morning session, US Treasuries yields edged lower after an unexpected surge for housing starts in May, the most since 2016.

US-listed Chinese stocks tumbled on disappointment over stimulus measures. Alibaba Group Holding Ltd. whipsawed before trading about 2.7% lower following the surprise replacement of its chief executive and chairman.

Key events this week:

  • Federal Reserve Bank of St. Louis President James Bullard speaks, Tuesday
  • New York Fed President John Williams speaks, Tuesday
  • Federal Reserve Chair Jerome Powell delivers semi-annual congressional testimony before the House Financial Services Committee, Wednesday
  • Federal Reserve Bank of Chicago President Austan Goolsbee speaks, Wednesday
  • Eurozone consumer confidence, Thursday
  • Rate decisions in UK, Switzerland, Indonesia, Norway, Mexico, Philippines, Turkey, Thursday
  • US Conference Board leading index, initial jobless claims, current account, existing home sales, Thursday
  • Federal Reserve Chair Jerome Powell delivers semi-annual testimony to Congress before the Senate Banking Committee, Thursday
  • Cleveland Fed’s Loretta Mester speaks, Thursday
  • Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
  • Japan CPI, Friday
  • US S&P Global Manufacturing PMI, Friday
  • Federal Reserve Bank of St. Louis President James Bullard speaks, Friday

Some of the main moves in markets: 


  • The S&P 500 fell 0.5% as of 9:30 a.m. New York time
  • The Nasdaq 100 fell 0.3%
  • The Dow Jones Industrial Average fell 0.5%
  • The Stoxx Europe 600 fell 0.3%
  • The MSCI World index fell 0.4%


  • The Bloomberg Dollar Spot Index rose 0.1%
  • The euro was little changed at $1.0915
  • The British pound fell 0.4% to $1.2738
  • The Japanese yen rose 0.4% to 141.42 per dollar


  • Bitcoin rose 0.6% to $26,884.67
  • Ether was little changed at $1,729.8


  • The yield on 10-year Treasuries declined three basis points to 3.74%
  • Germany’s 10-year yield declined nine basis points to 2.42%
  • Britain’s 10-year yield declined 14 basis points to 4.35%


  • West Texas Intermediate crude fell 1.5% to $70.72 a barrel
  • Gold futures fell 1% to $1,952 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Brett Miller and Anchalee Worrachate.

More stories like this are available on

©2023 Bloomberg L.P.