US Equity Indexes Fall, Treasury Yields Lower After ISM Services Index Drops

US equity indexes fell with government bond yields after midday on Tuesday following a steeper-than-anticipated decline in the Institute for Supply Management's services index for February.

The S&P 500 fell 1% to 5,082.1, with the Nasdaq Composite down 1.7% to 15,933.3 and the Dow Jones Industrial Average trading 0.8% lower at 38,677.9. Technology and consumer discretionary were at the bottom of the list intraday. Energy and consumer staples were among the gainers.

In economic news, the Institute for Supply Management's US services index declined to 52.6 from 53.4 in January, versus the 53 estimate in a survey compiled by Bloomberg. But the S&P Global US services index was revised higher to 52.3 for February from the 51.3 flash reading versus expectations for 51.4 in a survey compiled by Bloomberg. The February index is still below the 52.5 reading in January.

New orders for US factory goods fell 3.6% in January, versus forecasts for a 3% drop in a survey compiled by Bloomberg, and a revised 0.3% decline in December.

The US 10-year Treasury yield decreased 7 basis points to 4.15%, and the two-year dropped 4.6 basis points to 4.56%.

Atlanta Fed President Raphael Bostic on Monday said one interest-rate cut is expected in Q3, followed by a pause. "Given the uncertainty, I think there is some appeal to acting and then seeing how participants in the markets, businesses leaders and families respond to that," a Stifel note cited Bostic as saying.

Fed Chair Jerome Powell will deliver his two-day Congress testimony before the House on Wednesday and the Senate on Thursday. Investors will focus on anything Powell says about the timing and the extent of potential rate cuts later this year.

Gold for April delivery on the Comex rose 0.6% to $2,138.5 intraday, touching the highest level for a most-active futures contract earlier in the session.

The precious metal's sharp move suggests "continued demand from momentum buyers and low short-selling appetite at a time of heightened geopolitical tensions along with market's continued optimism around the [interest] rate-cut trajectory." Saxo Bank said in a note.

West Texas Intermediate crude oil slid 0.7% to $78.16 per barrel intraday, extending a drop from the previous session.

In company news, Apple's AAPL iPhone sales in China sank 24% year-over-year during the first six weeks of this year amid increased competition from domestic rivals, research firm Counterpoint said Tuesday. Apple shares dropped 2.7% intraday, among the steepest decliners on the Dow Jones.

Target TGT reported a 58% jump in fiscal Q4 earnings that topped market estimates, as the retailer benefited from lower markdowns and shrink costs. Shares surged nearly 13% intraday, the top performer on the S&P 500.

Albemarle ALB said, late on Monday, that it started a $1.75 billion underwritten offering of depositary shares. The company's stock sank more than 11% intraday, the worst performer on the S&P 500.