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* U.S. May factory orders rise more than expected
* Commodity-linked stocks, banks shares tumble
* Indexes fall: Dow 1.59%, S&P 1.20%, Nasdaq up 0.09%
July 5 (Reuters) - The S&P 500 and the Dow fell on Tuesday,
with investors fretting about the possibility of a recession as
central banks across the world take aggressive actions to stem a
surge in inflation.
U.S. stocks have been under relentless selling pressure this
year, with the benchmark S&P 500 index recording its
steepest first-half percentage drop since 1970, as the Federal
Reserve moves away from easy-money policy by raising borrowing
Investors are now waiting for minutes from the Fed's meeting
in June on Wednesday as they brace for another 75-basis-point
rate hike at the end of the month.
Traders are also keeping a watch on economic data, including
a U.S. payrolls report expected on Friday, and company
commentaries for signs of peaking inflation and cooling economic
growth, as regular trading commenced after a long weekend and
with the earnings season around the corner.
"Recession concerns are dominating the market," said Sam
Stovall, chief investment strategist at CFRA.
"The real question is if the economy is slowing, then by how
much will second-quarter earnings or guidance disappoint. People
are waiting until they get some news that could serve as a
Data showed new orders for U.S.-manufactured goods increased
more than expected in May, showing demand for products remains
strong even as the Fed seeks to cool the economy.
Separately, business growth across the euro zone slowed
further in June and European natural gas prices surged again,
reigniting worries of a recession in the bloc.
"Earnings projections were being artificially held up. Over
the next two weeks, everyone is going to start lowering
estimates and we expect to see a significant amount of
volatility," said Dan Genter, chief executive of Genter Capital
Benchmark U.S. Treasury yields tumbled on Tuesday and a key
part of the yield curve inverted for the first time in three
weeks as economic growth concerns dented risk appetite and
increased demand for the safe haven U.S. debt.
Bank stocks, which are sensitive to economic outlook,
tumbled. The S&P 500 banks index dropped 2.1%, more
than the financial sector's 1.9% fall.
Energy stocks hit five-month lows as recession fears
darkened the outlook for oil demand. The materials sector
was at a near 1-1/5-year low as a slump in metal
prices hit mining shares.
At 12:23 p.m. ET, the Dow Jones Industrial Average
was down 492.96 points, or 1.59%, at 30,604.30, the S&P 500
was down 45.90 points, or 1.20%, at 3,779.43.
The Nasdaq Composite was up 10.47 points, or 0.09%,
at 11,138.31, paring early losses.
Shares of Warner Bros Discovery Inc dropped 1.5%
after reports of the media and streaming firm's unit, HBO Max,
halting production of original shows in Europe.
Declining issues outnumbered advancers for a 2.97-to-1 ratio
on the NYSE and a 1.31-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 51 new lows,
while the Nasdaq recorded 10 new highs and 280 new lows.
(Reporting by Amruta Khandekar and Shreyashi Sanyal in
Bengaluru; Editing by Anil D'Silva and Shounak Dasgupta)