Stock Market Today: Relief Rally Fizzles for Dow, S&P 500

blue stock market chart — (Image credit: Getty Images)

The stock market roared out of the gate Tuesday, with all three major market indexes up at least 1% in early action. However, the rebound attempt quickly ran out of steam, with stocks sliding into negative territory by lunchtime.

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Comments from Chicago Fed President Charles Evans helped give stocks an initial lift. The central bank official told CNBC's "Squawk Box Europe" this morning that he is a "little nervous" that the Fed's aggressive rate-hike efforts are "not leaving much time to sort of look at each monthly release."

However, markets began to ease back after a couple of "good news is bad news" economic reports. The Commerce Department said that new home sales were up 28.8% month-over-month in August. The report points to signs of continued strength in the economy, suggesting the Fed still has a lot of work to do to slow growth.

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Additionally, the Conference Board's consumer confidence index hit a five-month high of 108 in September. "Stocks pared some gains after an impressive consumer confidence report suggested the Fed could remain aggressive a lot longer," says Edward Moya, senior market strategist at currency data provider OANDA. "The end to the Fed tightening cycle is in view, the question is how restrictive will rates get."

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The Dow Jones Industrial Average extended its slide into bear-market territory, shedding 0.4% to 29,134. The S&P 500 Index also ended in the red, down 0.2% at 3,647, while the Nasdaq Composite held on for a 0.3% gain to 10,829.

price chart for Dow, S&amp;P and Nasdaq on Sept. 27, 2022

Other news in the stock market today:

The small-cap Russell 2000 added 0.4% to 1,662.
U.S. crude futures gained 2.3% to settle at $78.50 per barrel as Hurricane Ian shut down production across several Gulf of Mexico production platforms.
Gold futures stabilized, adding 0.2% to finish at $1,633.40 an ounce.
Bitcoin edged up 0.7% to $19,053.30. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
Energy stocks rose alongside oil prices. Among the day's notable gainers were Exxon Mobil (XOM, +2.1%), Marathon Petroleum (MPC, +3.7%) and Shell (SHEL, +2.7%).
Keurig Dr Pepper (KDP) fell 3.5% after Goldman Sachs analyst Bonnie Herzog downgraded the consumer staples stock to Neutral (Hold) from Buy. "KDP continues to execute well in a challenging environment, and we have been encouraged by the strong underlying momentum in both its coffee and packaged beverage businesses as well as its ongoing initiatives to expand/enhance its distribution capabilities," Herzog says. However, the analyst now sees "a more balanced risk/reward," as well as an increased risk to margins due to elevated commodity inflation.

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Rising Treasury yields have kept investors on edge for much of September. The yields on the two-year and 10-year notes are set to end the month at their highest levels since 2007 and 2010, respectively. But while climbing bond yields have sparked volatility in the equities market, they have also created an opportunity for income-oriented investors.

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"Now that interest rates have moved substantially higher, we believe opportunities in fixed income have improved and are looking to add back to certain areas within fixed income that may benefit," says Lawrence Gillum, fixed-income strategist at independent broker-dealer LPL Financial. Gillum adds that along with higher yields, the central bank's commitment to stave off "continuing inflationary pressure – even at the expense of an economic contraction" could have bonds acting like bonds again, and providing "the ballast for equities" within a diversified portfolio.

Investors seeking out portfolio protection via the fixed-income market can take a look at these bond exchange-traded funds (ETFs), which cover a variety of strategies. Additionally, these top bond funds look attractive from both a value and yield perspective. Check them out.

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With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.