Stock Market Today: Nasdaq, S&P 500 Fall Again as Treasury Yields Rise

Most stocks closed lower for a fifth straight day Tuesday, as rising government bond yields turned up the heat once again. 

The Nasdaq Composite (-1.1% at 10,426) and the S&P 500 Index (-0.7% at 3,588) finished in the red as the 10-year Treasury yield climbed 5.2 basis points to 3.937%. (A basis point = 0.01%.) Remember, rising bond yields can have an outsized effect on tech stocks that are valued based on longer-term earnings. And as bond yields and borrowing costs rise, these longer-term earnings can be negatively impacted. 

Not helping matters was an early afternoon speech from Cleveland Fed President Loretta Mester. "Given the current level of inflation, its broad-based nature, and its persistence, I believe monetary policy will need to become more restrictive in order to put inflation on a sustainable downward path to 2 percent," Mester said. Investors will hear the latest inflation updates this week, with the producer price index (PPI) set for release tomorrow and the consumer price index (CPI) due out Thursday.

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However, the Dow Jones Industrial Average (+0.1% at 29,239) eked out a win thanks to a big rally in Amgen (AMGN). The biotech stock jumped 5.7% after Morgan Stanley analyst Matthew Harrison upgraded it to Overweight (the equivalent of a Buy), saying AMGN has upside potential thanks to its experimental weight-loss drug, AMG133.

Other news in the stock market today:

• The small-cap Russell 2000 edged up 0.06% to 1,692.
• U.S. crude futures fell 2% to settle at $83.95 per barrel.
• Gold futures gained 0.6% to finish at $1,686 an ounce.
• Bitcoin shed 1.1% to $18,996.66. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Walgreens Boots Alliance (WBA) rose 2.4% after the drugstore chain said it will buy the remaining 45% of at-home healthcare company CareCentrix it doesn't own for $392 million. WBA expects the full acquisition to be complete in March 2023.
• Ride-sharing stocks Uber Technologies (UBER, -10.4%) and Lyft (LYFT, -12.0%) slid after the Labor Department said it will revisit how some gig workers are classified. "While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation's most vulnerable workers," said Marty Walsh, secretary of Labor, in a prepared statement. "Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.

Q3 Earnings Season: What the Experts Are Saying

In addition to this week's PPI and CPI releases, inflation will be a major point of focus as the third-quarter earnings season kicks off. Beverage giant PepsiCo (PEP) headlines tomorrow's results, while big banks like JPMorgan Chase (JPM) and Wells Fargo (WFC) appear on Friday's earnings calendar. 

Expectations are low for earnings growth this time around thanks to a quarter full of macro headwinds, including inflation, a stronger dollar and rising interest rates. "As of today, the S&P 500 is expected to report (year over-year) earnings growth of 2.4% for the third quarter, which would be the lowest earnings growth reported by the index since Q3 2020," says John Butters, senior earnings analyst at FactSet. And this is down from the 2.8% third-quarter earnings growth that was estimated on June 30. 

Here, we rounded up what some of Wall Street's top minds are saying about a potentially brutal Q3 earnings. Take a look.