Comments from Federal Reserve Bank of Chicago President Charles Evans spooked the market on Tuesday and re-introduced the idea that the central bank could begin tapering its bond-buying program in September.
Speaking to reporters, Evans said that I would clearly not rule out the possibility that the current quantitative easing program will be scaled back at the September FOMC meeting.
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Market jitters about how the U.S. economy will perform in the absence of record stimulus led to a decline in risk assets on the day.
The Dow Jones Industrial Average fell 93 points, or 0.60 percent, to close at 15,519.
The S&P 500 lost 10 points, or 0.57 percent, to 1,697.
The Nasdaq fell 27 points, or 0.74 percent, to 3,666.
Crude oil traded lower along with the stock market on Tuesday. Late in the afternoon, NYMEX crude futures were down 1.12 percent to $105.37. Brent crude contracts had lost 0.54 percent to $108.11. Natural gas was trading very slightly down at last check at $3.32.
Precious metals were also lower on the session. COMEX gold futures fell 1.47 percent to $1,283.20. Silver contracts lost a little more than 1 percent to $19.51. Copper was last trading up 0.16 percent to $3.1730.
The grains complex was lower on Tuesday with the exception of wheat. Corn futures were down around 0.27 percent while wheat contracts climbed 0.81 percent. Movers in soft commodities included coffee and orange juice. Coffee futures fell 1.46 percent while orange juice concentrate contracts were down 1.51 percent.
Long-term Treasury prices rose modestly on the day. Heading into the closing bell, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) was up 0.26 percent to $105.97.
Yields were as follows on Tuesday afternoon: The 2-Year Note yield was 0.31 percent and the yield on the 5-Year Note was sitting at 1.39 percent. The 10-Year Note and 30-Year Bond were yielding 2.64 percent and 3.73 percent, respectively.
Near the close of equities, the U.S. dollar was down moderately. The PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, had lost 0.27 percent to $22.07.
The closely watched EUR/USD pair was last trading up 0.35 percent to $1.3305. Other movers included the USD/JPY, which fell 0.67 percent, and the AUD/USD, which climbed 0.83 percent.
Volatility and Volume
The CBOE Volatility Index jumped on Tuesday as the market declined. Late in the day, the VIX was up around 8.50 percent to 12.85.
Volume remained very light as many on Wall Street are on Summer vacation. Around 67 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 67 million.
Shares of Fossil Group (NASDAQ:FOSL) were up more than 18 percent near the close after the company released better-than-expected fiscal Q2 earnings results.
Interactive Intelligence Group (NASDAQ:ININ) continued its run-up on Tuesday, adding around 14 percent, after reporting a profit for its fiscal second-quarter.
DealerTrack Technologies (NASDAQ:TRAK) jumped better than 10 percent after its fiscal second-quarter results.
A bullish note from analysts at Cowen & Co. may have triggered a rally in shares of PBF Energy (NYSE:PBF). The stock was last trading up around 10 percent on the session.
Shares of Himax Technologies (NASDAQ:HIMX) have been the subject of volatile moves and heavy trading in recent weeks. The stock jumped more than 9 percent on Tuesday on no major news.
McDermott International (NYSE:MDR) plunged in the wake of very weak second-quarter results. The stock was last trading down more than 20 percent late on Tuesday.
Retailer American Eagle (NYSE:AEO) plummeted on Tuesday after the company delivered a profit warning for its fiscal second-quarter. The stock fell more than 12 percent on the session.
Despite reporting a higher profit for its fiscal third-quarter, investors were disappointed with results from AECOM Technology (NYSE:ACM). The stock fell almost 17 percent on the session.
Biotech firm Tesaro (NASDAQ:TSRO) saw its shares lose more than 9 percent on Tuesday. The reason for the move was not readily apparent.
EXCO Resources (NYSE:XCO) fell more than 9 percent on the day after the company's fiscal second-quarter earnings results failed to impress investors.
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