It was a strange day and an odd mix of returns, which might make a bit of sense once the market’s dual concerns about inflation and recession are factored in. While inflation remains a big concern, investors are also concerned about the strength of economic growth.

This is reflected in the US Treasury market, where the 10-year yield fell 0.088 percentage points to 2.818%.

“Not so long ago, inflationary anxiety was driving the move in US rates,” writes Ian Lyngen of BMO Capital Markets. “[That] has given way to the specter of a recession and falling yields accurately reflect the prospect of a domestic and global slowdown.

Falling yields were good news for the Nasdaq and the growth stocks residing there, whatever the cause. Remember, when the Fed started raising rates, tech stocks

Nvidia

(NVDA), as well as adjacent technology companies like

Metaplatforms

(META),

netflix

(NFLX), and

Amazon.co.uk

(AMZN), took it seriously because the market’s first reaction was to cut valuations, especially very high valuations.

Yields are now falling, which makes those same stocks, which fell 42%, 50%, 69% and 32% respectively, look like bargains after their steep declines. On Tuesday, Nvidia gained 3%, Meta climbed 5.1%, Netflix rose 3.3%, and Amazon rose 3.6%.

The tech could also have been boosted by reports that there was a ‘constructive’ call between US Treasury Secretary Janet Yellen and Chinese Vice Premier Liu, with the two agreeing on better coordination of macroeconomic policies. .

The United States was also expected to suspend tariffs on some Chinese imports, following a Wall Street Journal report detailing plans to lift tariffs on certain consumer goods and to launch a general framework allowing importers to apply for tariff waivers, which is seen as good news. for technology stocks.

Together they eclipsed reports of a lockdown in a major Chinese city circling on Tuesday.

Economically sensitive stocks, which had held up better, are now a cause for concern, if only because they are so dependent on economic growth for their profits. But now that investors are worried about a recession, they are going through a tougher time.

caterpillar

(CAT), for example, fell 2.5% today, while

Chevron

(CVX), slid 2.6% as oil fell below $100 (yes, blame recession fears again).

A flurry of economic data in the week ahead, including Friday’s U.S. nonfarm payrolls report, as well as minutes from the Federal Reserve’s June meeting, will be watched closely as investors hunker down. ask whether a tighter monetary policy is necessary.

And the market is right to worry about a slowdown. The Atlanta Fed’s GDPNow tool, for example, points to a 2.1% drop in US GDP in the second quarter, which would be the second quarter in a row and meet the technical definition of a recession.

Overnight, meanwhile, the yield on the two-year Treasury hit 2.95% and briefly topped that of the 10-year. This is called a yield curve inversion and is thought to be a prelude to a recession, although the timing is uncertain.

The joker can sit in Europe. It’s not just that the euro is weak – it fell 1.5% to 1.0265 on Tuesday – but the message it sends.

Europe experienced extreme energy price inflation following the Russian invasion of Ukraine, particularly related to natural gas. Concerns over widening spreads between bond yields among European Union members are also adding selling pressure on the Euro.

“The euro is in dire straits now because the central bank is so far off target and now has an even bigger problem in terms of fragmentation,” said Neil Wilson, an analyst at brokerage Markets.com. “Unless the [European Central Bank] pulls itself together, it could soon be at par. These are important levels and it should be noted that the USD is a bid at all levels. »

The U.S. dollar index – which measures the greenback against a basket of six peers – jumped 1.3% to 106.51, its highest level in 20 years and from 96 at the start of 2022. This n is not necessarily good news for stock market investors. A strong dollar means that multinational companies – many of them in the United States – are seeing their international sales worth less at home.

It’s just one more sign that the market is in bigger trouble than investors are attributing to it, even though stocks managed to avoid a sell-off for one more day.

Here are the stocks in motion on Tuesday:

Anheuser-Busch InBev

(ticker: BUD) fell 0.8% despite an upgrade from Buy at Citi and analysts’ expectations from Deutsche Bank that the drinks giant would have a strong second quarter with double-digit profit growth.

CureVac

(CVAC) fell 1.1% after filing a lawsuit against

BioNTech

(BNTX) for patent infringement.

BioNTech

increased by 2.2%.

resume

(

resume

Q) fell 1% after being replaced by In Line by Outperform at Evercore ISI.

Kohls

(KSS) rose 2.6% after Friday’s 20% drop after the end of the sell-off talks.

Nokia (NOK) fell 2.4% despite securing a five-year contract with Ice Norway.

SAP (SAP) lost 1.7% even after analysts at Berenberg began blanketing the European software giant with a Buy rating, citing increased demand for its cloud software solutions.

Sony (SONY) fell 0.9% after being cut back to Neutral by Buy at Citi.

You’re here

(TSLA) The stock rose 2.6% after reporting June deliveries over the weekend.

Texas Instruments

(TXN) rose 0.4% after being cut to Hold from Buy at DZ Bank.

Write to Ben Levisohn at [email protected] and Jack Denton at [email protected]