Stocks ended mixed on Tuesday, following a session in which the broader market notched new record highs, as traders digested a weaker than expected report on U.S. retail sales and looked ahead to a Federal Reserve policy meeting later this week.

[Click here to read what’s moving markets heading into Wednesday, March 17]

The Nasdaq closed slightly positive. The Dow fell by more than 100 points, giving back some recent gains. A day earlier, both the Dow and S&P 500 reached new highs, bolstered by the signing of a new $1.9 trillion stimulus bill that’s poised to spur consumer spending and ignite economic growth. Most Americans are poised to receive $1,400 stimulus checks, which began arriving over the weekend, and Wall Street economists have already begun hiking their gross domestic product (GDP) estimates for the remainder of the year, amid expectations that the stimulus will unleash a consumer rebound. And while U.S. retail sales dipped by the most since April 2020 last month, the decline is likely to be a one-off, as additional stimulus and vaccine-enabled reopenings help stoke consumption.

Still, Washington’s aggressive spending spree, and ultra-accommodative monetary policy, has focused growing attention on runaway deficit spending — which is at least part of the reason why government borrowing costs have begun to spike, even as the Federal Reserve remains committed to fostering growth through lower yields and higher inflation.

The central bank will render its verdict on monetary policy on Wednesday, which is widely expected to confirm a bias for more easy policy.

Last week, the benchmark 10-year Treasury yield spiked to a pre-pandemic high around 1.6{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}, up about 50 basis points in a month. Another warning sign has emerged via Bitcoin (BTC-USD), where prices over the weekend topped $60,000, a new record high before paring those gains on Monday.

With large amounts of fiscal and monetary stimulus backstopping activity, economists at BlackRock are anticipating “a much stronger post-COVID economic restart than what we would expect in a normal recovery. The rapid upward adjustment in U.S. Treasury yields and more muted movement in inflation-adjusted yields make sense in this respect, and are still consistent with our new nominal theme” of higher prices and government liquidity, the firm noted.

“The restart bolsters our pro-risk stance over the next six to 12 months, and makes us lean further into cyclical assets” like stocks and private equity, BlackRock added.

On Friday, Goldman Sachs economists projected that the fiscal rescue package would give the economy even greater impetus in 2021, estimating gross domestic product would expand by 6{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} in the first quarter. For that reason, markets will closely watch remarks this week from Fed Chair Jerome Powell for hints about whether the central bank is growing concerned about moves in the bond market, and an economy that could overheat.

However, Goldman noted that “Fed officials are unlikely to see much of a problem [with rising rates] at a time when financial conditions remain easy, activity is picking up, and powerful growth impulses are set to support the economy all year.”

Meanwhile, technology stocks have underperformed the broader market, as the gradual reopening of states and localities — and a COVID-19 mass vaccination effort that’s gathering steam — has encouraged investors to rotate out of so-called “stay at home” trades favoring big names like Amazon (AMZN), Netflix (NFLX), Apple (AAPL) and Facebook (FB). Soaring interest rates has amplified volatility across the tech sector, amid expectations of higher borrowing costs weighing on growth companies.

4:03 p.m. ET: Stocks end mixed: Dow drops 128 points, or 0.4{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}, to pull back from a record high, Nasdaq ekes out gain

Here were the main moves in markets as of 4:03 p.m. ET:

  • S&P 500 (^GSPC): -6.26 (-0.16{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 3,962.68

  • Dow (^DJI): -127.77 (-0.39{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 32,825.69

  • Nasdaq (^IXIC): +11.86 (+0.09{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 13,471.57

  • Crude (CL=F): -$0.72 (-1.10{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to $64.67 a barrel

  • Gold (GC=F): +$0.40 (+0.02{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to $1,729.60 per ounce

  • 10-year Treasury (^TNX): +1.4 bps to yield 1.6210{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}

2:46 p.m. ET: Stocks fall, Nasdaq turns negative

Each of the three major indexes traded lower Tuesday afternoon, with the Nasdaq erasing earlier gains of as much as 1.2{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} to dip into the red.

The Dow dropped 150 points, or 0.5{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}, as shares of Boeing and American Express lagged. The communication services and information technology sectors outperformed in the S&P 500, though these gains were outweighed by declines in other sectors like energy, industrials and financials.

1:40 p.m. ET: ‘Fear gauge’ slips to pandemic-era low

The CBOE Volatility Index, or the VIX, fell to a pandemic-era low of 19.37 on Tuesday, pulling back sharply from its elevated levels throughout much of the pandemic. This measure of volatility is commonly referred to as the “fear gauge” on Wall Street.

During the pandemic, the VIX peaked at 85.47 on March 18, 2020, spiking amid a plunge in the major stock indexes as uncertainty over the coronavirus pandemic surged.

The VIX averaged at about 15.4 in 2019.

1:31 p.m. ET: Dow holds lower while Nasdaq gains

Here’s where markets were trading Tuesday afternoon:

  • S&P 500 (^GSPC): +0.55 points (+0.01{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 3,969.49

  • Dow (^DJI): -136.84 points (-0.42{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 32,817.39

  • Nasdaq (^IXIC): +75.24 points (+0.56{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 13,534.91

  • Crude (CL=F): -$0.44 (-0.84{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to $64.84 a barrel

  • Gold (GC=F): +$1.10 (+0.06{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to $1,730.30 per ounce

  • 10-year Treasury (^TNX): -0.1 bps, yielding 1.606{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}

11:24 a.m. ET: Fund managers no longer cite COVID-19 as the biggest ‘tail risk’: BofA

Fears of another resurgence in COVID-19 no longer comprise the biggest “tail risk” cited by fund managers, according to Bank of America’s latest Global Fund Manager Survey. This marked the first time since February 2020 that the virus was not the top-cited source of concern.

“A year ago, COVID-19 was named a global pandemic on March 11. COVID-19 has been named for the last 12 months as the #1 investor ‘tail risk,'” the BofA analysts wrote in a note Tuesday. “This month however, for the first time since Feb’20, it is no longer the largest risk. Inflation (37{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) and taper tantrums (35{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) are now seen as bigger risks.”

Moreover, economic expectations have improved significantly, with the plurality of surveyed investors, or 48{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}, saying that the economy is undergoing a V-shaped recovery. That compared to just 10{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} of investors surveyed in May 2020.

9:39 a.m. ET: What economists are saying about the disappointing February retail sales report

While retail sales sank more than expected in February, many economists are looking ahead to a rebound in the coming months, as additional fiscal stimulus and a broader, vaccine-enabled economic reopening allow spending to pick back up. Moreover, the significant upward revision to January’s retail sales figure also suggests the economy entered 2021 on firmer footing, many noted.

Here’s what some economists are saying about the February report:

  • “Sales were much weaker than expected in February, likely due to weather effects. Even with the weak outcome, the control component is rising at a solid pace so far in Q1. A new round of relief checks to households and ongoing income support from supplemental unemployment benefits will no doubt provide strong support to spending in March and subsequent months.” – Rubeela Farooqi, High Frequency Economics economist

  • “There was a sizable upward revision to the already-strong January figure, which was revised from a 5.3{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} increase to a 7.6{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} gain … It looks like much of the stimulus boost in January benefited retailers of discretionary products, with double-digit percentage gains that month for sellers of furniture, electronics, and sporting goods. The weakness last month was likely due to some payback for an exceptionally strong January, which was probably also aggravated by the unseasonable weather in Texas.” – Michael Feroli, JPMorgan economist

  • “The net revision was a hefty +2.0{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}, so the report is not as weak as the headlines suggest. But the key point here is that these data tell us nothing about how the economy is likely to perform over the next few months. The combination of the potential ongoing boost from the stimulus payments made under the December Covid relief bill and the hit from the huge mid-month storm made these numbers a wild card. It’s impossible to know if sales would have risen without the storm, because we don’t know how much more of the $166B in stimulus payments would have been spent.” – Ian Shepherdson, Pantheon Macroeconomics economist

9:30 a.m. ET: Stocks open mixed

Here’s where markets were trading after the opening bell on Wall Street:

  • S&P 500 (^GSPC): +4.31 points (+0.11{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 3,973.25

  • Dow (^DJI): -26.50 points (-0.08{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 32,926.96

  • Nasdaq (^IXIC): +63.80 points +0.47{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to 13,518.13

  • Crude (CL=F): -$1.32 (-2.02{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to $64.07 a barrel

  • Gold (GC=F): +$1.90 (+0.11{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to $1,731.10 per ounce

  • 10-year Treasury (^TNX): -1.4 bps to yield 1.593{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}

8:30 a.m. ET: Retail sales dropped more than expected in February

U.S. retail sales slid more than anticipated in February, pulling back after a January jump, according to the Commerce Department’s monthly report Tuesday morning.

Retail sales fell 3.0{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} in February over January, missing expectations for just a 0.5{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} drop, based on Bloomberg consensus data. This followed a jump of 7.6{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} in January, which was sharply upwardly revised from the 5.3{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} monthly gain previously reported.

February’s decline marked the largest drop since April last year at the height of pandemic-related stay-in-place orders. Excluding auto and gas sales, retail sales fell even further, dropping 3.3{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} after an 8.5{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6} gain in January.

7:17 a.m. ET Tuesday: Stock futures point to a mixed open

Here’s where markets were trading Tuesday morning ahead of the opening bell:

  • S&P 500 futures (ES=F): 3,969.25, up 1.75 points or 0.04{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}

  • Dow futures (YM=F): 32,924.00, down 33 points or 0.1{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}

  • Nasdaq futures (NQ=F): 13,141.75, up 63.25 points or 0.48{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}

  • Crude (CL=F): -$0.94 (-1.44{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to $64.45 a barrel

  • Gold (GC=F): +$4.20 (+0.24{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}) to $1,733.40 per ounce

  • 10-year Treasury (^TNX): -0.5 bps to yield 1.602{98cae0078f524eff3ab8ec32cf55b261677ef6c8a6ed6e94d92a4234b93f46b6}

6:45 p.m. ET Monday: Stock futures mixed

Here’s where markets were trading Monday evening:

  • S&P 500 futures (ES=F): 3953.75, -4.50

  • Dow futures (YM=F): 32800, -50

  • Nasdaq futures (NQ=F): 13061.75, -7.50

Javier David is an editor for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek

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