S&P 500 snaps winning streak as sentiment cools amid policy uncertainty

4:10pm: Rally cools

US markets were down at the close Tuesday as stocks took a breather following a robust multi-week rally.

The Dow Jones fell 115 points, or 0.3%, to 42,677, while the S&P 500 lost 23 points, or 0.4%, to close at 5,940. The Nasdaq also slipped 0.4% to 19,143.

Small caps, tracked by the Russell 2000, ended flat at 2,104. Investors took some profits off the table and reassessed risk as uncertainty around trade policy and the Federal Reserve's rate path resurfaced.

A mixed batch of headlines kept sentiment in check. Home Depot reported first-quarter results that missed on profits but beat on revenue, reaffirming its full-year outlook despite tariff concerns. Meanwhile, Tesla CEO Elon Musk reiterated his leadership commitment for the next five years while signaling reduced political activity, and Intel weighed strategic shifts, including a possible sale of its networking and edge businesses.

These developments came as analysts warned that the rally might not reflect an all-clear for investors, with LPL Financial's Kristian Kerr highlighting lingering risks from economic data and tariff effects.

Elsewhere, Fed policymakers maintained a hawkish tone, reinforcing expectations that rate cuts may not arrive before September. With US economic indicators painting a mixed picture and policy volatility still in play, markets may remain choppy. Treasury yields remained mostly steady despite diverging global central bank signals, while bond traders continued watching for signs of inflation persistence and Fed commentary.

3:44pm: Proactive news headlines

Giyani Metals Corp has shipped high-purity manganese oxide samples from its demonstration plant in South Africa to potential offtake partners for testing.

M2i Global has appointed former acting U.S. Secretary of Veterans Affairs Peter O’Rourke Sr as a senior advisor to its executive team and board.

EnWave Corp has expanded its licensing agreement with Creations Foods US to include pet treats using its dehydration technology.

Wedgemount Resources Corp has added energy sector veteran Simon Clarke to its board of directors.

Baselode Energy Corp has expanded near-surface uranium mineralization at its ACKIO project in northern Saskatchewan through its summer drilling program.

Standard Uranium Ltd has identified near-surface uranium at its Corvo project in Saskatchewan and is preparing for its first drilling campaign.

3:02pm: Tuesday's headlines

Home Depot Inc (NYSE:HD, ETR:HDI) reported mixed earnings for the first quarter but reaffirmed its full-year forecast amid tariff-related uncertainty.

Intel Corp (NASDAQ:INTC, ETR:INL) is considering selling its networking and edge businesses, previously grouped under its NEX division, as part of a strategic refocus under new CEO Lip-Bu Tan.

Tesla Inc (NASDAQ:TSLA) CEO Elon Musk has committed to leading the electric vehicle maker for the next five years while scaling back his political spending during an interview at Bloomberg’s Qatar Economic Forum 2025 in Doha.

1:46pm: Plenty of risk remains

The recent surge in US equity markets may not signal the all-clear for investors, according to Kristian Kerr, Head of Macro Strategy at LPL Financial, who warned that policy uncertainty and lagging economic data could still trigger renewed volatility.

“While it may be tempting to interpret this powerful rally as a definitive signal that risks have subsided, the reality is that plenty of uncertainty remains,” Kerr commented.

Kerr described the equity market’s rebound over the past month as “extraordinary” in both speed and scale, noting that the abrupt shift in sentiment is among the fastest he has witnessed in his 25-year career. He attributed the sharp selloff in early April to a policy shock triggered by a tariff announcement on April 2, which exceeded investor expectations and prompted widespread risk aversion.

While markets have since recovered, Kerr cautioned that the economic effects of the tariffs are still unclear and may not be fully visible until June or July, when lagging data begins to reflect any real damage. He also pointed to a volatile policy backdrop, with broader tariffs paused until early July and significant increases on Chinese imports delayed until August.

“If meaningful economic weakness does materialize — confirmed by hard data mirroring the softness seen in leading indicators — or trade negotiations deteriorate, another bout of market volatility could ensue,” Kerr wrote.

12:35pm: Wall Street takes a breather

Stocks are taking a breather at midday Tuesday after a solid multi-week run. The Dow and S&P 500 are both down 0.4%, while the Nasdaq is off 0.3%. It looks like the rally that’s lifted markets in recent weeks is finally hitting pause as investors take some profits and reassess where things stand.

A few things are driving the pullback. First, there's been a strong streak — the S&P 500 was on a six-day win run — and now traders are stepping back to consider whether those gains are sustainable. Optimism around easing trade tensions and cooling inflation had been boosting sentiment, but now there’s a bit more caution creeping in.

Home Depot’s earnings also stirred things up. The company posted mixed results — profits fell short, but revenue came in better than expected. Still, Home Depot reaffirmed its full-year guidance and said it doesn’t plan to hike prices much despite tariffs, which gave the stock an early bump.

Speaking of tariffs, last week’s rally was fueled in part by a temporary US–China agreement to reduce some of them, but investors are now questioning how long that boost can last. Tariff levels are still high, and a few Fed officials have suggested we may not see rate cuts until at least September, citing ongoing trade uncertainty.

For now, Wall Street is waiting to hear more from the Fed, with economic data like the Philadelphia Fed’s non-manufacturing report still to come, along with commentary from central bank policymakers. All eyes remain on the Fed’s next move.

11:41am: Canadian inflation drops

Canada’s annual inflation rate dropped to 1.7% in April, largely due to the end of the consumer carbon price and falling energy costs, including an 18.1% decline in gas prices. However, core inflation—which excludes energy—rose to 2.9%, and grocery prices continued to climb, with food bought in stores up 3.8% from a year earlier.

The inflation data reduced market expectations for a June rate cut by the Bank of Canada, pushing the odds of a cut below 40%.

Despite the headline slowdown, underlying price pressures remain, particularly in groceries and travel, suggesting persistent inflationary forces.

The news has pushed Canada's biggest stock exchange, the Toronto Stock Exchange, to an all time high. The index is trading just shy of 26,090 points at midday.

10:36am: Yields at risk

Diverging central bank stances, including a hawkish Fed outlook and upcoming UK inflation data, are weighing on bonds but have yet to significantly affect US Treasury yields.

"US yields could be at risk from a hawkish Fed," XTB's Kathleen Brooks noted.

"The Fed’s John Williams said that he does not see a rate cut coming before September, while Raphael Bostic is leaning towards just one cut for this year, there is currently just over two cuts expected for this year by the Fed Fund Futures market.

"So far, this is not having an impact on US Treasury yields."

9.55am: Travel stocks and tech lead early declines 

Wall Street stocks opened Tuesday in reverse gear, led by declines for travel & leisure and tech stocks.  

The S&P 500 dropped 0.3%, while the tech heavy Nasdaq slid 0.5%, the blue-chip Dow Jones dipped 0.2% and the small cap Russell 2000 fell 0.3%.

On the S&P, Norwegian Cruise Line, Carnival Corp, Airbnb, Royal Caribbean Cruises and Las Vegas Sands were among the bigger fallers, sinking between 2% and 4%. 

Nvidia also led declines for the tech giants, slipping 1.6%, with Microsoft and Apple both down less than 1%. 

8am: S&P 500 to reverse despite bond market softening

US equity futures are pointing to a weaker open on Wall Street on Tuesday, despite gains in most other global markets after US bond yields softened.

Futures for the S&P 500 were down 0.7%, while contracts tied to the Nasdaq 100 were 0.8% lower and for Dow Jones Industrial Average down 0.4%.

This comes despite a risk-on tone globally, as European equities advance, with the FTSE 100 climbing to a two-month high.

Yesterday, the main US stock indexes all started in the red but ended higher, with the Dow climbing 0.8%, the S&P 0.7% and the Nasdaq Composite 0.4%, with only the small caps of the Russell 2000 unable to recover, ending 0.4% lower. 

US Treasury yields continued to retreat slightly following Monday’s volatility, where the 30-year yield spiked intraday to its highest level since 2023 before closing lower.

The dollar index weakened further, down 0.7%, as risk appetite improved and investors rotated away from safe-haven asset, but then rebounded and saw most of this decline wiped out.

Market watchers say sentiment is buoyed by hopes of geopolitical de-escalation – with renewed ceasefire speculation between Russia and Ukraine – along with fresh economic stimulus from China, including lending rate cuts.

Hopes of a breakthrough in Iran nuclear talks and softening rhetoric around US-China trade tensions were expected to support a broader risk rally, but Iran has said it will never stop enriching uranium.

Still, concerns remain over US fiscal dynamics and the potential expiry of the 2017 Trump tax cuts in 2025, along with fragile confidence about trade. 

"News that China is accusing the US of undermining the latest trade ‘agreement’ is causing some of the angst," said Kenny Polcari, market analyst at Slatestone Wealth.

Commerce Secretary Howard Lutnick issued guidance saying that using "Huawei’s Ascend chips risks violating export controls", which led to anger from China.

"All this suggests is that the tension remains high and the relationship remains fragile, and that uncertainty is just a reason to be cautious," said Polcari.

"And here is another reason to be cautious – markets have rallied strongly off the lows – so expect some churn as we continue to repair the damage suffered since April 2," he said, adding that there is "still a lot of uncertainty ahead" including the tax bill, more trade agreements, more economic data and ups-and-downs of various geopolitical talks.

On the macro front, white-collar job vacancies in the US dropped 16.2% in April, according to new data from Robert Walters, suggesting a cautious hiring environment in the face of tariff and regulatory headwinds.

On the commodities side, WTI crude oil was trading 0.5% lower at just under $62 a barrel, despite speculation that progress on Russia-Ukraine talks could eventually ease energy sanctions.

Investors will be closely watching for corporate results from Home Depot, Palo Alto Networks, and Toll Brothers, as well as data from the American Petroleum Institute (API) on US oil stockpiles.

Comments from Fed officials will also be scrutinized following mixed signals on the interest rate path.