Dow falls 400 points to continue second quarter’s weak start

The Dow Jones Industrial Average dropped 409 points, or 1%, on Tuesday after declining more than 500 points at its lows. That means the blue-chip index had at one point sunk roughly 800 points during the first two days of the second quarter. On Tuesday morning, the S&P 500 fell 0.9% and the Nasdaq Composite lost 1.3%.

The market’s declines come after the S&P 500 notched its best first quarter since 2019 on Friday. The S&P 500 index rose 10.2% during the first three months of the year. The Dow and Nasdaq gained 5.6% and 9.1%, respectively.

Behind the selloff? The Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, rose 2.5% for the 12 months that ended in February, a faster clip than January’s price increase.

Fed Chair Jerome Powell last Friday warned that rate cuts won’t be imminent.

“We don’t need to be in a hurry to cut,” he said at an event hosted by the San Francisco Fed.

That send bond yields rising. The 10-year Treasury yield touched its highest level of the year on Tuesday and was last trading at 4.37%.

Traders pulled back their expectations for a rate cut in June to about 62% from more than 70% a week earlier, according to the CME FedWatch Tool.

Investors are looking to the March jobs report due Friday morning. Economists polled by FactSet expect a seasonally adjusted total of 192,500 jobs added in March, down from a 275,000 increase in February.

Elsewhere, Tesla shares slipped 6.1% on Tuesday, after the electric vehicle maker posted its first annual drop in sales since 2020 as it continued to battle with rising competition.

This is a developing story and will be updated.

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