U.S. equities finished lower, adding to a recent selloff, as the markets continued to contend with a host of headwinds. Persistent inflation has prompted the Fed to become more aggressive in its monetary policy tightening campaign, fostering uncertainty of if it can engineer a soft landing. The recent rise in interest rates and strength in the U.S. dollar continued to sap sentiment, signaling tightening financial conditions, while the war in Ukraine and COVID-induced lockdowns in China have exacerbated the backdrop. Treasuries were higher, pushing yields lower, and the U.S. dollar was nearly flat, while gold traded to the downside and crude oil prices tumbled. Earnings season rolled on, with Tyson Foods rising after topping expectations and raising its guidance, while Palantir fell after missing profit projections and issuing softer-than-expected guidance. The lone item on the economic docket showed wholesale inventories continued to rise. Asia finished mostly lower amid the global uneasiness, which also weighed on European markets.

The Dow Jones Industrial Average fell 654 points (2.0%) to 32,246, the S&P 500 Index declined 132 points (3.2%) to 3,991, and the Nasdaq Composite tumbled 521 points (4.3%) to 11,623. In heavy volume, 5.9 billion shares of NYSE-listed stocks were traded, and 5.8 billion shares changed hands on the Nasdaq. WTI crude oil plunged $6.68 to $103.09 per barrel. Elsewhere, the gold spot price traded $8.70 lower to $1,884.40 per ounce, and the Dollar Index was unchanged at 103.69.

Tyson Foods Inc. (TSN $93) reported adjusted fiscal Q2 earnings-per-share (EPS) of $2.29, above the $1.89 FactSet estimate, as revenues grew 16.1% year-over-year (y/y) to $13.1 billion, north of the Street's $12.8 billion expectation. The protein producer said its results reflect improving operational execution and strong customer and consumer demand, while it continued to see inflationary pressures across the supply chain. The company added that it is working to drive costs down by continuing to increase efficiency, productivity, and bringing more capacity on line. TSN raised its full-year revenue guidance amid expected strong results from its beef segment, and a projected stronger performance out of its chicken unit in the second half of the year. Shares traded higher. 

Palantir Technologies Inc. (PLTR $7) posted adjusted Q1 EPS of $0.02, below the forecasted $0.04, with revenues rising 31.0% y/y to $446 million, above the expected $443 million. The data analytics software company said its commercial revenue grew 54.0% y/y, and its government revenues were up 16.0%, while its customer count was 86.0% higher compared to last year. PLTR issued Q2 revenue and operating margin guidance that came in below forecasts, while noting that there is a wide range of potential upside to the outlook, including those driven by its role in responding to developing geopolitical events. Shares fell over 20%.  

Q1 earnings season remains in full force and of the 440 S&P 500 companies that have reported thus far, roughly 67% have topped sales expectations and about 77% have bested profit projections, per data compiled by Bloomberg. So far, y/y sales growth is tracking to be up 13.9%, and earnings growth is on track to be 7.8% higher.   

Schwab's Chief Investment Strategist Liz Ann Sonders discusses the volatile market action in her latest article, When the Levee Breaks, Panic Is Not a Strategy. She notes that April was the worst month for the S&P 500 since March 2020, and that it's been a mixed-to-weaker bag in terms of macro drivers and we expect significant bouts of volatility to persist. She concludes that this is not a time for investors to take on risk outside the parameters of their strategic asset allocations. It is a time for investors to employ traditional disciplines around diversification (across and within asset classes), to focus on quality in terms of stocks' fundamentals, and to stay in gear via periodic rebalancing. You can follow Liz Ann on Twitter: @LizAnnSonders.

Read all our market commentary on our Market Insights page, and you can follow us on Twitter at @SchwabResearch.

Treasury yields lower amid light economic calendar

Treasuries are higher after losing ground as of late that has lifted yields as the markets continue to brace for tighter Fed monetary policy following last week's 50 basis point (bp) rate hike, which Schwab's Liz Ann Sonders discusses in her latest article, 50 Ways to Leave Your Mark.

Amid this backdrop, check out the latest offering from Schwab's Director of Fixed Income Collin Martin and Director of Fixed Income Strategy Cooper Howard titled 8 Questions on the Bond Market and Rate Hikes, where they provide their insight into some of the most frequently asked questions they have received this year.

The yield on the 2-year note is decreased 7 bps to 2.60%, the yield on the 10-year note fell 8 bps to 3.04%, and the 30-year bond rate moved 5 bp lower to 3.18%.

March wholesale inventories (chart) grew 2.3% month-over-month (m/m), unrevised from the previously reported gain, where the Bloomberg forecast called for it to remain, but below February's 2.8% increase. Sales rose 1.7%, compared to forecasts of a 1.8% gain, and after February's downwardly-adjusted 1.5% advance.

Tomorrow, the economic calendar will remain lean, offering only the NFIB Small Business Optimism Index, forecasted to have nudged lower to a level of 92.9 in April from March's 93.2.

Europe broadly lower amid global uneasiness

European equities finished with widespread losses, with the markets continuing to grapple with monetary policy tightening implications after last week's rate increases from the Fed and the Bank of England. The moves came as the markets continue to face rising inflation pressures, along with increasing interest rates and the recent rally in the U.S. dollar. Global economic growth uncertainty also remained, exacerbated by the COVID-related lockdowns in the world's second largest economy of China. Meanwhile, global sentiment remained hampered by the ongoing war in Ukraine, which has fostered concerns about food and energy supplies and amplified inflation concerns. Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers his latest commentary, Hedging Stocks Against Rising Rates. Jeff notes how investors should consider hedging the possible risk of higher interest rates with the addition of short duration stocks, a potential way to manage risk while remaining invested in the markets. You can follow Jeff on Twitter: @JeffreyKleintop. In economic news, Eurozone investor confidence deteriorated more than expected for May. The euro and British pound were higher versus the U.S. dollar, while bond yields in the Eurozone and the U.K. were lower.

The U.K. FTSE 100 Index was down 2.3%, France's CAC-40 Index dropped 2.8%, Germany's DAX Index and Spain's IBEX 35 Index declined 2.2%, Italy's FTSE MIB Index was 2.7% lower, and Switzerland's Swiss Market Index traded 2.4% to the downside.

Asia mostly lower following data and host of concerns

Stocks in Asia were mostly lower to begin the week, with the markets digesting some economic data in the region, which came after Friday's solid April U.S. nonfarm payroll report. Japan's labor cash earnings for March came in above expectations, and China's April export growth in U.S. dollar terms grew more than anticipated, though in Chinese yuan terms exports were softer than estimated. The global markets continue to contend with a plethora of headwinds, including rising inflation and interest rates, which have some major central banks tightening monetary policy, along with uncertainty regarding the ultimate global economic impact of the COVID-induced lockdowns in China. However, China's central bank reiterated a pledge to support the economy amid the lockdowns by offering aid to small businesses and areas hit by the COVID outbreaks. The recent rally in the U.S. dollar has also been a source of uneasiness in the international markets. In our latest Schwab Market Perspective: Inflation's Shadow, Schwab's Liz Ann Sonders, Jeffrey Kleintop, and Kathy Jones note how rising prices and slowing demand have cast shadows on this year's economic outlook, especially as the Federal Reserve begins tightening monetary policy. Whether the situation will lead to a recession remains to be seen. Globally, there are signs that stretched supply chains are beginning to ease, potentially slowing the pace of inflation—which would be welcome news for investors and central bankers.

Japan's Nikkei 225 Index fell 2.5%, with the yen continuing to soften versus the U.S. dollar, though China's Shanghai Composite Index ticked 0.1% higher. Australia's S&P/ASX 200 Index decreased 1.2%, South Korea's Kospi Index traded 1.3% lower, and India's S&P BSE Sensex 30 Index declined 0.7%. Markets in Hong Kong were closed for a holiday.

Tomorrow's international economic calendar will offer retail sales from Australia, industrial production from Italy, and the Zew Economic Sentiment Index from Germany.