“The Fed wants that yield to go up; it will help banks with their net interest margins. For the spread-base lenders, it helps their profits,” said Raich.
Year-to-date, the financial sector has been the best performer, a fact that Raich attributes to the Fed’s monetary policy. When the Fed began its monetary easing, “you had to overweight the financials and the home builders, as that is who they were targeting,” said Raich.
The S&P 500 index fell 9.04 points to 1,631.38.
Shares of Dollar General Corp. fell 9.2 percent after the retailer reduced its 2013 earnings outlook. “A lot of these retailers reporting in the last quarter have been cutting their estimates pretty hard,” said Raich.
The Nasdaq composite lost 20.11 points to 3,445.26.
On the New York Mercantile Exchange, the price of a barrel of oil reversed course multiple times before closing down 14 cents at $93.31. Gold futures lost $14.70 to close at $1,397.20 an ounce.
Speaking at a panel discussion on employment Tuesday afternoon, Sarah Bloom Raskin, a governor of the Federal Reserve’s board, said the nation’s 7.5 percent jobless rate “still remains too high” and it underestimates “the scope of the problem,” Reuters reported.
“With unemployment still high, the Fed needs that closer to 7 percent before it takes its foot off the gas,” Andrew Fitzpatrick, director of investments at Hinsdale Associates, said in emailed commentary.
“Friday’s jobs report should give us a strong indication as to the health of the economy,” added Fitzpatrick of the nonfarm-payrolls report for May.
On Wednesday, the ADP employment report for May is slated for release, followed by Thursday’s weekly jobless claims.
Ahead of the open, U.S. stock futures extended gains after the Commerce Department reported the U.S. trade deficit climbed 8.5 percent to $40.3 billion in April, less than the $41.5 billion projected by economists.
Data from CoreLogic showed home prices rose 12.1 percent in April.