Stocks close broadly lower on Wall Street as banks stumble

Stocks are closing broadly lower, giving up their gains from a day earlier. Banks took some of the bigger losses as bond yields fell Tuesday, and energy companies fell along with a steep drop in the price of crude oil. The S&P 500 lost 0.8%. Stocks of smaller companies, which have far outpaced the rest of the market this year, fell even more. The Russell 2000 index gave back 3.6%. The drop in bond yields hurt banks because it means lower interest rates on mortgages and other kinds of loans. The price of benchmark U.S. crude oil sank 6.2%.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Stocks headed lower in afternoon trading Tuesday, placing the market on track to give back its gains from a day earlier.

The S&P 500 was down 0.9% as of 3:34 p.m. Eastern time after shedding an early gain. Technology, industrial and health care companies accounted for much of the selling. Energy stocks also helped drag down the market as oil prices fell.

Bond yields also declined. That weighed on banks and other financial companies which look to bond yields as a benchmark for the interest rates they charge on mortgages and other loans.

The tech-heavy Nasdaq was down 1.1% while the Dow Jones Industrial Average, fell 335 points, or 1.1% to 32,384. The selling was heaviest among smaller companies, which dragged the Russell 2000 index 3.8% lower.

Investors continue to be focused on the future outlook for the U.S. economy as millions of Americans get vaccinated every day. Investors are wavering between optimism that coronavirus vaccines that might allow business and travel to return to normal and fears of higher inflation after struggling economies were flooded with credit and government spending.

"The market feels like it is in this inflection point," said Darrell Cronk, chief investment officer of Wells Fargo Wealth and Investment Management. "It’s a good day for reflection."

The price of U.S. crude oil dropped 6.2% to $57.76 a barrel, pulling energy companies lower. Energy prices have been steadily climbing this year until recently, as the global economy recovers and oil demand worldwide increases while production remains constrained. Marathon Oil fell 6.6%.

Another drop in long-term bond yields pulled bank stocks lower. When bond yields fall they mean lower interest rates on loans such as mortgages, and weaker profits for banks and other lenders. Bank of America fell 2.1% and Wells Fargo dropped 2.10%. American Express slid 3%.

The yield of the 10-year Treasury note fell to 1.63%. The yield was well above 1.70% last week, which had put some pressure on the stock market.

The S&P 500 hit a pandemic-era low exactly one year ago, on March 23, 2020, having dropped nearly 34% in about a month. That wiped out three years’ worth of gains. The index wound up roaring back in the coming months, and recovered all its losses by August. Through Monday, it had surged 76% from that low point.

Cronk said many of the signs in the market point to an early-stage recovery. Interest rates are rising as the economy strengthens, commodities like oil are making steady gains and sectors tied closely to economic growth are doing well. "It’s playing out exactly as it should play out."

AstraZeneca fell 3.5% after U.S. authorities said that the drug company’s COVID-19 vaccination trial data contained "incomplete" information, which may impact its efficacy. AstraZeneca’s vaccine is being primarily used in Europe.

One company to watch later will be GameStop, which will report its quarterly results after the closing bell. GameStop has been a stock of great interest to a community of online investors, who pushed the stock to astronomical heights earlier in the year. The stock continues to be extremely volatile, often moving more than 10% on a given day. It was down 5.8% in afternoon trading.