Stocks moved mostly lower during trading on Tuesday, with the Nasdaq showing a particularly steep drop amid weakness among technology stocks. The narrower Dow managed to buck the downtrend, however, as the blue chip index inched higher over the course of the session.

After plunging by nearly 350 points in morning trading, the Dow ended the day up 19.80 points or 0.1 percent at 34,133.03. Meanwhile, the Nasdaq tumbled 261.62 points or 1.9 percent to 13,633.50 and the S&P 500 slid 28.00 points or 0.7 percent to 4,164.66.

The weakness on Wall Street largely reflected a continued pullback by technology stocks, as reflected by the steep drop by the Nasdaq.

The Nasdaq reached a record intraday high during trading last Thursday but has pulled back sharply since then, falling to its lowest closing level in a month.

Traders may be cashing in on tech stocks that benefited from the coronavirus-induced lockdowns as more states continue to lift restrictions.

Additional selling pressure was generated in reaction to comments from Treasury Secretary Janet Yellen, who suggested interest rates may have to rise modestly to prevent the economy from overheating amid the recent spike in government spending.

“Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates,” Yellen said at The Atlantic’s Future Economy Summit.

“But these are investments our economy needs to be competitive and to be productive,” she added. “I think our economy will grow faster because of them.”

The comments from Yellen come even though the Federal Reserve has repeatedly indicated interest rates are likely to remain at near-zero levels for the foreseeable future.

Concerns about the near-term outlook for the markets may also have weighed on Wall Street, as some analysts have warned the markets have come too far too fast in light of the ongoing pandemic.

Most major companies have reported better than expected quarterly results this earnings season, but buying interest has been somewhat subdued amid worries about valuations.

Meanwhile, the uptick by the Dow partly reflected strong gains by Dow Inc. (DOW) and Caterpillar (CAT), which helped offset steep losses by Apple (AAPL) and Microsoft (MSFT).

In U.S. economic news, a report released by the Commerce Department showed the U.S. trade deficit hit a new record high in the month of March.

The Commerce Department said the trade deficit widened to $74.4 billion in March from a revised $70.5 billion in February.

The trade deficit was nearly in line with estimates, as economists had expected the deficit to widen to $74.5 billion from the $71.1 billion originally reported for the previous month.

A separate report from the Commerce Department showed new orders for U.S. manufactured goods rebounded slightly less than expected in the month of March.

Sector News

Airline stocks showed a significant move to the downside on the day, resulting in a 2.5 percent nosedive by the NYSE Arca Airline Index.

Considerable weakness was also visible among biotechnology stocks, as reflected by the 2.2 percent slump by the NYSE Arca Biotechnology Index.

Networking, software and computer hardware stocks also saw notable weakness, contributing to the steep drop by the tech-heavy Nasdaq.

On the other hand, steel stocks moved sharply higher over the course of the session, driving the NYSE Arca Steel Index up by 2.1 percent to its best closing level in nearly ten years.

Banking stocks also turned in a strong performance on the day, with the KBW Bank Index climbing by 1.4 percent to a record closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, with the Japanese and Chinese markets still closed for holidays. Hong Kong’s Hang Seng Index advanced by 0.7 percent, while Australia’s S&P/ASX 200 Index climbed by 0.6 percent.

Meanwhile, the major European markets moved to the downside on the day. While the German DAX Index plunged by 2.5 percent, the French CAC 40 Index slid by 0.9 percent and the U.K.’s FTSE 100 Index fell by 0.7 percent.

In the bond market, treasuries pulled back well off their best levels but still closed modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slipped by 1.5 basis points to 1.592 percent after hitting a low of 1.557 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to the latest economic data, including reports on private sector employment and service sector activity.

On the earnings front, Activision Blizzard (ATVI), Herbalife (HLF), Lyft (LYFT), Prudential (PRU), T-Mobile (TMUS), and Western Union (WU) are among the companies releasing their quarterly results after the close of today’s trading.

General Motors (GM), Hilton (HLT), ODP Corp. (ODP), and Tupperware (TUP) are also among the companies due to report their results before the start of trading on Wednesday.

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