NEW YORK: U.S. stocks fell Tuesday as investors fretted about the prospect of higher interest rates.
A handful of upbeat economic data releases and comments from Federal Reserve officials increased investors’ expectations that rates will rise this year.
The Dow Jones Industrial Average fell 180.73 points, or 1%, to 17529.98. The S&P 500 dropped 19.45 points, or 0.9%, to 2047.21. The Nasdaq Composite lost 59.73 points, or 1.3%, to 4715.73.
Tuesday’s declines reduced the S&P 500’s gains for the year to 0.2%.
Consumer staples shares in the index fell 1.9% and the utilities sector dropped 1.7%, making them the worst performers of the day.
Those sectors include companies that tend to pay steady dividends, which has helped them rise this year amid prolonged low interest rates and scarce returns elsewhere. Utilities shares in the S&P 500 are up 12% so far this year, more than any other sector.
“We exited our utilities stocks” in recent months, said Mariann Montagne, portfolio manager at Gradient Investments in Arden Hills, Minn. “We’re not sticking our neck out for very high types of yield.”
Home Depot was the biggest laggard in the Dow, falling $3.34, or 2.5%, to 132.00. The decline shaved 23 points off the index, even after the home improvement chain reported stronger-than-expected quarterly results.
Coca-Cola lost 87 cents, or 1.9%, to 44.75. Procter & Gamble fell 1.01, or 1.2%, to 80.62.
Interest rate futures—a popular tool for hedge funds and money managers to place bets on the Fed’s policy—showed Tuesday that the odds of a rate increase at the Fed’s June meeting were 15%, up from 4% a day ago, according to CME Group.
The odds for a rate increase at the December meeting were 71%, up from 58% a day earlier.
The yield on the 10-year Treasury note rose to 1.759% from 1.752% Monday as prices fell.
At an event in Washington on Tuesday, both Federal Reserve Bank of San Francisco President John Williams and Atlanta Fed President Dennis Lockhart said the June meeting is “live,” suggesting that a rate increase next month isn’t off the table.
The Fed’s minutes from its April policy meeting are scheduled to be released Wednesday.
U.S. crude-oil futures rose 1.2% to $48.31 a barrel, a seven-month high, on continued signs of supply declines from around the world.
The recovery in oil and gasoline prices has helped lift consumer prices. The consumer-price index rose 0.4% in April from the prior month, the Labor Department said Tuesday. It was the largest one-month increase since February 2013.
Industrial production , a measure of factory, utilities and mine output, rose 0.7% in April, the biggest one-month increase since November 2014, the Federal Reserve said. U.S. home building also rose last month, the Commerce Department said.
Stocks have struggled for direction recently. The Dow has changed direction from the prior session for seven consecutive trading days on a closing basis.
“We’re basically just hopping, not convinced of a big selloff or a run,” said Omar Aguilar, chief investment officer for equities at Charles Schwab Investment Management.
“A lot of people are still waiting for more clear views on where the global economy is going to go,” he said.
