US Market tumbles in broad selloff

The US stock market finished session steep lower on Tuesday, 21 February 2023, as risk aversion selloff triggered on renewed concerns that US Fed to go for the interest rate hike in upcoming FOMC meeting this week after the strong US economic data announced last week. Also weighing sentiments was latest geopolitical developments.

At the close of trade, the Dow Jones Industrial Average index declined 697.10 points, or 2.06%, to 33,129.59. The S&P500 index was down 81.75 points, or 2%, to 3,997.34. The tech-heavy Nasdaq Composite Index dropped by 294.97 points, or 2.5%, to 11,492.30.

The weak finish of the Wall Street was chiefly due to heavy selloff in energy, technology, and materials stocks amid lingering worries about the outlook for interest rates following this week's batch of economic data and comments from Federal Reserve officials.

All 11 sectors ended lower along with the S&P500 Index. Consumer discretionary was the worst performing sector, falling 3.34%, followed by information technology (down 2.4%), communication services (down 2.3%), industrials (down 2.3%), and financials (down 2%) sectors.

The weak finish of the Wall Street was chiefly due to rekindled worries that stubborn inflation will lead the Federal Reserve to keep rates higher for longer. The market is now pricing U.S. interest rates to peak at 5.30% in July and remain above 5% by the end of the year, moving away from expectations of deeper rate cuts this year.

Investor focus is firmly on the release on Wednesday of the minutes of the Fed's latest meeting when it raised interest rates by 25 basis points.

Also weighing sentiments was latest geopolitical developments. U.S. President Joe Biden made an unannounced visit to Kyiv ahead of the one-year anniversary of Russia's invasion of Ukraine amid mounting concerns over China's stand on Russia and Ukraine. U.S. Secretary of State Antony Blinken warned China of consequences should it provide material support to Russia and North Korea fired more missiles.

Among individual stocks, Home Depot shares tumbled 7% after the home improvement retailer posted weaker-than-expected revenue for the fourth quarter. The company also issued a muted outlook.

ECONOMIC NEWS: US Existing Home Sales Decline 0.7% In January-Existing home sales in the U.S. unexpectedly decreased for the twelfth consecutive month in January, according to a report released by the National Association of Realtors on Tuesday. NAR said existing home sales slid 0.7 percent to an annual rate of 4.00 million in January after tumbling by 2.2 percent to a revised rate of 4.12 million in December.

NAR also said total housing inventory at the end of January was 980,000 units, up 2.1 percent from 960,000 units in December and up 15.3 percent from 850,000 a year ago. The unsold inventory represents 2.9 months of supply at the current sales pace, unchanged from December but up from 1.6 months in January 2022.

The report said the median existing home price was $359,000 in January, down 2.1 percent from $366,500 in December but up 1.3 percent from $354,300 a year ago.

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