Wall Street dips as choppy recovery, looming tax hikes weigh on sentiment
- August CPI comes in cooler than expected
- Financials worst performers as bond yields drop
- Apple down slightly after product launch event
- Indexes down: Dow 0.65%, S&P 500 0.38%, Nasdaq 0.15%
NEW YORK, Sept 14 (Reuters) - Wall Street lost ground on Tuesday as investors looked past lower-than-expected inflation data, focusing instead on economic uncertainties and growing chances of a corporate tax rate hike.
All three major U.S. indexes initially bumped higher following the Labor Department's consumer price index report, but optimism quickly faded and they turned negative in a reminder that September is a historically rough month for stocks.
Dropping yields for benchmark U.S. Treasuries pressured financial stocks (.SPSY) and investor favor pivoted back to growth (.IGX) at the expense of value (.IVX).
"We're in a seesaw market," said Greg Bassuk, chief executive at AXS Investments in Port Chester, New York. "Until there is more consistency in the trajectory of economic recovery, the double rotation trades we're seeing right now will continue."
The advent of the highly contagious Delta COVID variant has driven an increase in bearish sentiment regarding the recovery from the global health crisis, and many now expect a substantial correction in stock markets by the end of the year. read more
"Investors are still cautious," Bassuk added. "Besides the economic data, they care about the continued spread with delta variants, uncertainty with the Fed, as well as geopolitical concerns."
The CPI report delivered a lower-than-consensus August reading, a deceleration that supports Federal Reserve Chairman Jerome Powell's assertion that spiking inflation is transitory and calms market fears that the central bank will begin tightening monetary policy sooner than expected. read more
The long expected corporate tax hikes, to 26.5% from 21% if Democrats prevail, are coming nearer to fruition with U.S. President Joe Biden's $3.5 trillion budget package inching closer to passage. read more
The Dow Jones Industrial Average (.DJI) fell 226.96 points, or 0.65%, to 34,642.67; the S&P 500 (.SPX) lost 16.76 points, or 0.38%, at 4,451.97; and the Nasdaq Composite (.IXIC) dropped 22.32 points, or 0.15%, to 15,083.26.
Financial stocks suffered the biggest percentage drop among the 11 major sectors in the S&P 500, while healthcare (.SPXHC) led gainers.
Apple Inc (AAPL.O) unveiled its iPhone 13 and added new features to its iPad and Apple Watch gadgets in its biggest product launch event of the year as the company faces increased scrutiny in the courts over its business practices. Its shares were last down 0.7%. read more
Intuit Inc(INTU.O) gained 2.2% after the TurboTax maker announced it would acquire digital marketing company Mailchimp for $12 billion. read more
CureVac slid 8.3% after the German biotechnology company canceled manufacturing deals for its experimental COVID-19 vaccine. read more
Declining issues outnumbered advancing ones on the NYSE by a 1.74-to-1 ratio; on Nasdaq, a 1.83-to-1 ratio favored decliners.
The S&P 500 posted two new 52-week highs and two new lows; the Nasdaq Composite recorded 45 new highs and 71 new lows.
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