Dow, S&P 500 ease as rate worries mount, banks shares dip

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks mostly edged lower on Tuesday as worries lingered that the Federal Reserve will need to keep interest rates higher for longer and as banks shares eased.

Financials, down 0.8%, were the biggest drag on the . An S&P downgrade of multiple regional U.S. lenders weighed on bank shares, with the KBW regional banking index down 2.4% and the S&P 500 banks index down 2.1%.

Investors will seek some clarity on the rate outlook when Fed Chair Jerome Powell speaks at a meeting in Jackson Hole on Friday,

“Rates have backed up pretty good again, so that’s kind of putting somewhat of a damper on stocks,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The benchmark hit almost 16-year peaks on the view the Fed could keep interest rates higher for longer.

The fell 170.34 points, or 0.49%, to 34,293.35, the S&P 500 lost 11.06 points, or 0.25%, to 4,388.71 and the added 13.79 points, or 0.1%, to 13,511.38.

Investors also eagerly awaited results and a forecast from chip company Nvidia (NASDAQ:) due late on Wednesday. Its blockbuster report last quarter fueled a rally in tech stocks and artificial intelligence hopes.

Shares of Nvidia hit an all-time high of $481.87 early but were last down 2.8%.

Among decliners, Macy’s (NYSE:) fell 14% after the department store chain warned of weak consumer spending through the crucial holiday shopping season.

Declining issues outnumbered advancing ones on the NYSE by a 1.34-to-1 ratio; on Nasdaq, a 1.38-to-1 ratio favored decliners.

The S&P 500 posted 4 new 52-week highs and 12 new lows; the Nasdaq Composite recorded 37 new highs and 196 new lows.