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Dow drops 129 points as markets avoid larger losses with late rally

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Dow drops 129 points as markets avoid larger losses with late rally
The Dow Jones Industrial Average fell 129 points Tuesday as markets pulled off a late rally to avoid larger losses amid concern about a potential recession. File Photo by John Angelillo/UPI | License Photo

July 5 (UPI) -- U.S. markets staged a late rally Tuesday despite ongoing fears about a possible recession.

The Dow Jones Industrial Average closed the day down 129.44 points, or 0.42%, after having fallen by as much as 700 points earlier in the day. The S&P 500 eked out a 0.16% gain after it was down as much as 2% and the Nasdaq Composite rose 1.75%.

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Markets have fallen in four of the past five weeks with the S&P 500 in bear market territory -- down more than 20% from its record high -- on pace for its worst year since 1970.

The Dow has also dropped by a double-digit percentage since the start of the year for its worst year since 1962.

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Tuesday also saw 10-year treasury yield fall below 2.9%, while the U.S. oil benchmark, West Texas Intermediate crude, fell below $100 per barrel and posted its largest decline since March at session lows.

"Stock prices are down. Treasury yields are down. Oil prices are down. Corporate credit spreads are wider. The dollar exchange rate is higher. This is a recession trade," Neil Dutta, head of U.S. economics at Renaissance Macro Research, said. "There is no other way of describing it."

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Stocks tied to the economy declined Tuesday as shares of machinery names Caterpillar and Deere fell 2.54% and 3.15% respectively and mining stock Freeport McMoRan fell 6.55%.

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Bank stocks also declined with JPMorgan Chase dropping 1.16%.

Shares of Ford fell 1.06% after reporting lower than expected second quarter sales.

Conversely, tech stocks got a boost amid declining treasury yields with Docusign gaining 6.7% and Zoom rising 8.52%.

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Consumer discretionary stocks also contributed to the late rally with Nike increasing 3.1% and Amazon climbing 3.6%.

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