S&P 500 in Wild Swings as Yields Jump on Hawkish Fed Speak, Geopolitical Tensions

By Yasin Ebrahim

Investing.com -- The S&P 500 swung between gains and losses Tuesday, on rising geopolitical tensions and a surge in U.S. Treasury yields as Federal Reserve members talked down the prospect of a pause on rate hikes.

The S&P 500 fell 0.16%, the Dow Jones Industrial Average fell 0.68%, or 224 points, the Nasdaq was up 0.20%.

Geopolitical tensions thatched up a notch in intraday after Chinese battery giant CATL reportedly said it would pause plans to invest billions of dollars in a new U.S. battery plant because of House Speaker Nancy Pelosi’s trip to Taiwan.

The House Speaker arrived in Taiwan despite Beijing warning of retaliation over the visit.

Big tech, meanwhile, traded mixed after Treasury yields surged following remarks from Fed members playing down the prospect of the Fed pausing or cutting rates next year.

Cleveland Fed President Loretta J. Mester said it would “take a while to get inflation back to that 2 percent,” and shrugged off worries about the slowing economy, stressing that a slowdown is “necessary.”

The comments arrived just hours after San Francisco Fed President Mary Daly said the Fed’s job to bring inflation down was “far from done.”

Losses in consumer stocks were kept in check by a jump in Tesla and a jump in cruise stocks.

Tesla (NASDAQ:TSLA) cut losses to climb more than 1% - adding to its more than 30% gain seen in July - ahead of the electric automaker’s shareholder meeting on Thursday.

The meeting, which will include a vote on the company’s 3-for-1 stock split proposal, will also be closely watched for any updates on Cybertruck, Tesla’s all-electric pickup truck.

Healthcare stocks were helped by a rally in Intuitive Surgical (NASDAQ:ISRG), DexCom (NASDAQ:DXCM) and Zimmer Biomet Holdings (NYSE:ZBH), with the latter up more than 5% after the medical device company raised its outlook on revenue following better-than-expected quarterly results.

Energy stocks, meanwhile, were flat despite an intraday rebound in oil prices amid uncertainty about whether major oil producers will decide to lift production at a meeting on Wednesday.

Commerzbank said that while the outcome of the OPEC+ meeting is “impossible to predict...there is more to suggest that the current production volume will be left unchanged, which should help prices to stabilize.”

On the earnings front, investors digested mostly positive quarterly results, with Uber the standout performer.

Uber Technologies (NYSE:UBER) reported its maiden positive cash flow and a revenue that topped expectations offsetting a wider than expected loss to send the share price up more than 17%.

Caterpillar (NYSE:CAT), however, reported a miss on revenue as the impact of its exit from Russia, higher costs and a stronger dollar weighed on performance. Its shares fell more than 4%.

Pinterest (NYSE:PINS) jumped more than 12% despite quarterly results falling short of Wall Street estimates as activist investor Elliott Management confirmed that it had become the company’s largest shareholder as it looks to forward to helping the company realize its “full potential."

In other news, Cowen Group (NASDAQ:COWN) climbed nearly 8% after the financial services firm reportedly agreed to be acquired by TD Bank for $1.3 billion.