The S&P 500 slipped Tuesday, taking a breather following a major rally that has taken U.S. stocks to record levels.
The broad market index edged slightly above flat, while the Dow Jones Industrial Average shed 50 points, or 0.1%. The Nasdaq Composite advanced 0.3% after hitting a new intraday high earlier in the session.
"U.S. equities are trending sideways today in front of Friday's job report, which may provide insight into what the Fed might do following its December 17 and 18 FOMC meeting," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "On balance, we think there's much to like about U.S. equities, despite a wall of worry that looms on the horizon."
"Inflation, interest rates and earnings are supportive of a risk-on bias, and technological advances such as Gen AI continue to expand markets while pushing equities higher," he added.
Stocks have been on a blistering rally since the U.S. presidential election. Since the Nov. 5 vote, the S&P 500 has climbed 4.6%, and the Nasdaq has rallied 5.2%. The Dow is up 6% since then, and is trading near the key 45,000 level.
"When the market is up 10% or more with a newly elected President, it has never gone down in the month of December," said Ken Mahoney, CEO of Mahoney Asset Management.
But Mahoney cautioned this doesn't mean that stocks will soar in December, since November was the best month of the year for the market. During the last trading day of November, the Dow and the S&P reached new intraday and closing highs, leading both indexes to post their best months of 2024. The Dow added 7.5%, while the S&P 500 gained 5.7% last month.
Money Report
"But there's still enough demand for stocks, because I do think there's a fair amount of money that's coming up the sidelines post election," he added.
Economic data released on Tuesday morning showed that job openings were higher in October compared to September. Job openings hit a total of 7.74 million last month, topping the Dow Jones estimate of 7.5 million.
This was the first in a salvo of data releases expected this week that can provide insight into the strength of the labor market. The main event will be Friday's November payrolls report.
The data arrives ahead of the Federal Reserve's policy meeting on Dec. 17-18. Fed funds futures are currently pricing in a nearly 73% probability that the central bank lowers interest rates during its policy gathering, according to CME's FedWatch Tool.
Loop Capital reiterates buy rating on Best Buy following Cyber Monday
Loop Capital reiterated its buy rating on Best Buy, citing more competitive Cyber Monday prices than last year.
"The Cyber Monday average price gap between Best Buy and Amazon narrowed slightly from last year, with the total basket price gap narrowing even more so," managing director Anthony Chukumba wrote to clients.
Chukumba also pointed out that Best Buy prices matches some competitors like Amazon.
Best Buy's brick-and-mortar presence also "provides a significant advantage over Amazon, particularly for 'last minute' shoppers," the managing director said. He noted that this last-minute consumer base should be large this year, given the smaller time period between Thanksgiving and Christmas when compared with last year.
— Alex Harring
Bank of America shares 10 macro themes for 2025
In a Tuesday note, Bank of America shared 10 macro themes it's keeping an eye on for 2025.
Here was the list:
- U.S. equity strategist Savita Subramanian sees the S&P 500 rallying to 6,666 by the end of 2025, accompanied by earnings growth accelerating to 13%.
- Improved U.S. productivity will lift growth, inflation, and policy rates.
- U.S. bond yields will remain in a tight range, with the yield on the U.S. 10-year Treasury trading around 4% to 4.5%.
- Key commodities could weaken, such as oil.
- The U.S. dollar will continue its rally into the first half of 2025, before waning as the policy/growth outlook becomes less certain.
- Emerging markets face short-term risk, since tariffs have not been priced in yet.
- U.S. cyclicals should outperform due to reasons such as a red sweep and a renewed focus on productivity and efficiency.
- Credit markets should post strong positive total returns next year.
- Chinese real GDP growth will decelerate.
- Europe's STOXX 600 index could see 7% downside through the middle of 2025, followed by a recovery back to current levels.
— Lisa Kailai Han
Earnings growth between Magnificent Seven and broader market is ‘narrowing dramatically,’ says Kostin
Earnings growth is set to drive the market in the months ahead, according to Goldman Sachs' David Kostin.
Kostin, who has an S&P 500 target of 6,500 for year-end 2025, forecasts around 11% earnings growth for next year and 7% earnings growth for 2026.
"We think about the market going forward, it's mostly going to be earnings growth in terms of our analysis," the firm's chief U.S. equity strategist told CNBC's "Squawk on the Street." "The relative earnings growth between the Mag 7 and the rest of the market is narrowing dramatically."
— Sean Conlon
Hiring has slowed in 2024, Vanguard data shows
Vanguard's 401(K) enrollment data suggests that hiring for large corporations has slowed down throughout 2024.
"For firms with over 250 employees, the hires rate has been trending lower, dropping to 1.6% in October from 2.1% in April," Vanguard investment analyst David Pakula said in a note.
The data mirrors the hiring component of the Job Openings and Labor Turnover Survey, which has also fallen throughout the year. However, Vanguard's view is that the rate of hiring will not deteriorate further in 2025.
— Jesse Pound
New ETF launch, BlackRock acquisition highlight push into private credit
Tuesday has been a busy day for the ETF industry's push into private credit.
BlackRock announced a $12 billion deal to buy private credit firm HPS Investment Partners, giving the ETF giant a bigger foothold in the alternative asset space. Shares of BlackRock rose 2%.
And on the product side, BondBloxx launched a new collateralized loan obligation ETF designed to give investors more exposure to private credit.
Private credit is expected to be a big theme of the ETF industry in 2025, with many waiting to see what will happen with a proposed fund from State Street and Apollo.
— Jesse Pound
Mnuchin expects Trump to be 'very careful' with tariffs
Treasury Secretary Steven Mnuchin expects tariffs to be implemented strongly but carefully when President-elect Donald Trump takes over.
Specifically, he expects his ex-boss to find ways to enact tariffs without escalating inflation.
"There's a way, if you do these tariffs, to exempt certain things, like pharmaceuticals, which would have a big impact on on the consumer, as opposed to all the other items that that would ... create impacts more on the businesses, and be able to be absorbed, hopefully, by the selling country [to] a significant amount," Mnuchin said during a CNBC interview. "But I think he'll be very careful. He understands the impact of inflation."
As far as the impacts of Trump's initiatives, Mnuchin said his "expectation is that these policies will lead to the stock market doing very well over the next four years.
—Jeff Cox
China tariff threat ‘much more realistic’ than Mexico, Canada tariffs, says Wolfe Research
President-elect Donald Trump's plan to impose 25% tariffs on all goods from Mexico and Canada is unlikely to come to fruition, according to Wolfe Research.
"First, he made similar threats against Mexico in 2019 and didn't follow through," analyst Tobin Marcus said in a Tuesday note. "Second, border crossings and fentanyl deaths are already trending strongly downward, creating an ideal opportunity for Trump to take a win. And third, all sides are already positioning to declare victory and call the whole thing off."
That said, Marcus still sees "major" tariff risks coming down the pike even if the tariffs on Mexico and Canada are scrapped. In fact, he sees the threat of Trump raising tariffs on Chinese goods by an additional 10% as "much more realistic."
"Trump's personnel decisions reinforce our view that the tariff threat is real," the analyst also said, adding that Jamieson Greer as the former president's pick for U.S. trade representative is a "China hawk," especially when it comes to China's involvement in third countries. "We still expect that average China tariffs will end up rising from just over 10% to ~30%, with average ROW tariffs rising by 4-5 [percentage points]."
— Sean Conlon
See the stocks moving midday
These are some of the stocks moving midday:
- U.S. Steel — Shares dropped 8.6% Tuesday, the day after President-elect Donald Trump said he would stop Japan's Nippon Steel from buying the steelmaker.
- AT&T — The telecom stock jumped more than 4% after forecasting more than $18 billion in free cash flow in 2027.
- Cleanspark — The bitcoin miner slipped 4.3% on worse-than-expected revenue for the 2024 fiscal year.
— Alex Harring
RBC upgrades communication services, remains bullish financials and energy
RBC Capital Markets upgraded communication services, and remains overweight financials and energy, as its favorite sector picks heading into 2025.
Lori Calvasina, head of U.S. equity strategy at the firm, raised her rating on S&P 500 communication services to overweight from market weight, saying "the absence of negatives is a positive" for the sector. In particular, recently rising 2024 earnings consensus forecasts is a reassuring sign.
The strategist remains overweight S&P 500 financials, saying there is "still some room to ride out the strong momentum" in the sector following the U.S. presidential election. She cited the likelihood of corporate tax cuts, as well as a rise in mergers and acquisition and deregulation, as promising for the outlook.
She kept her overweight rating on S&P 500 energy, calling it a contrarian pick with valuations that remain attractive.
— Sarah Min
Wells Fargo upgrades Synchrony Financial, cites possible CFPB credit card late fee removal as catalyst
A new director of the Consumer Financial Protection Bureau under President-elect Donald Trump's new administration could send Synchrony Financial shares rallying, according to Wells Fargo.
The stock rose more than 1% in the premarket after analyst Donald Fandetti upgraded shares to overweight from equal weight. His updated price target implies more than 26% upside from Monday's close.
The analyst believes that the removal of the CFPB credit card late fee proposal would eliminate an overhang on the stock.
"Our base case is a new CFPB director pulls the proposal, though the populist administration element leaves some residual risk," he said in a Tuesday note. "While many expect the removal, certainty should be a meaningful positive catalyst and provide investors with greater confidence in achieving normalized EPS."
Shares have risen more than 21% in the past month and more than 75% year to date.
— Sean Conlon
Job openings rise while hirings fall in October
October saw an increase in available jobs but a drop in hirings, per data from the Bureau of Labor Statistics released Tuesday.
For the month, job openings hit 7.74 million, which is more than the Dow Jones estimate of 7.5 million, according to the BLS Job Openings and Labor Turnover Survey. That's also up 372,000 from September.
Meanwhile, hires came in at 5.31 million in the period, which is down 269,000 on the month. That figure brings the hiring rate down to 3.3%.
— Sean Conlon
EWY shares fall as South Korean president declares martial law
The iShares MSCI South Korea ETF (EWY) slipped more than 4% on Tuesday, after President Yoon Suk Yeol accused the country's opposition party of controlling parliament and supporting North Korea.
President Yoon Suk Yeol declared an "emergency martial law," and said he would "eradicate pro-North Korean forces and protect the constitutional democratic order."
— Brian Evans
Korean won tumbles against greenback
The Korean won weakened 1.2% against the dollar to its lowest level in two years on the news that South Korean President Yoon Suk Yeol declared "emergency martial law" on Tuesday.
The dollar last traded at 1,421.29 won.
— Hakyung Kim
Stocks open little changed on second trading day of the month
The S&P 500 opened little changed on Tuesday morning.
On the other hand, the Nasdaq Composite slid 0.3%, while the Dow Jones Industrial Average advanced 68 points, or 0.2%.
— Lisa Kailai Han
Stocks making the biggest premarket moves
Here are some of the names making the biggest moves in premarket trading:
- U.S. Steel — The stock sank 6.3% after President-elect Donald Trump said late Monday he will block the purchase of the steelmaker by Japan's Nippon Steel.
- AT&T — Shares added 3% after the company said it anticipates more than $18 billion in free cash flow in 2027. AT&T laid out its three-year vision on Tuesday, which includes plans to double its fiber internet availability.
- Credo Technology Group — The tech company jumped 33% after earnings topped analyst estimates late Monday and it issued strong current-quarter revenue guidance.
To see more stocks moving in premarket trading, read the full story here.
— Michelle Fox
Small-caps and low-quality stocks led post-election gains, Bank of America says
In November, the stock market posted its best month in a year. But two distinct asset classes led that outperformance: low-quality and small-cap stocks.
In fact, the past month was the best November for small versus large caps since 2020, Bank of America wrote in a Monday note.
"Tech was the best-performing sector in both small (+14.6%) and mid (14.0%) and Financials also outperformed in both segments, while Growth led Value in both small (by 3ppt) and mid (by 6ppt)," the firm added.
— Lisa Kailai Han
Bernstein downgrades FedEx
FedEx's looming decision on potentially spinning off its less-than-truckload business could weigh on the stock, according to Bernstein.
The firm downgraded the shipping stock to market perform from outperform and lowered its price target to $316 per share from $337. Bernstein's forecast implies about 7% upside from Monday's close.
"Longer-term we still see value in the stock, but adding at these levels ahead of increasing execution, event, and policy risk seems difficult to defend," analyst David Vernon said. "We're taking a tactical pause and lowering our rating ahead of a widely expected reset in the near-term guidance framework / uncertainty around meeting high LTL freight spinoff expectations."
— Brian Evans
European markets trade higher despite political turmoil in France
European markets traded higher Tuesday, with investors keeping an eye on political upheaval in France.
The pan-European STOXX 600 index traded 0.5% higher, with all sectors in positive territory apart from insurance and telecoms.
France's financial markets are being watched closely Tuesday as Prime Minister Michel Barnier's minority government faces a no-confidence vote Wednesday.
Opposition parties on both the left and right said on Monday that they will table no-confidence motions to bring Barnier's minority government down after he triggered special constitutional powers to pass a contested budget bill without a parliamentary vote.
The "motions de censure" are due to be debated in the French parliament, the National Assembly, on Wednesday and a vote could take place later tomorrow evening.
France's CAC 40 index was trading 0.5% higher Tuesday, despite the impending vote that will likely see the government collapse, putting the French economy in further peril.
Visit the European markets live blog here
— Holly Ellyatt
Chinese yuan weakens past 7.3 against the dollar for first time since July 3
The offshore yuan was trading at 7.29 against the greenback Tuesday morning local time, weakening past 7.3 for the first time since July 3, LSEG data showed. The yuan has lost more than 2% since the U.S. presidential election on Nov. 5.
On Monday, Capital Economics' head of China economics Julian Evans-Pritchard told CNBC's "Street Signs" that the yuan could fall further to 8 against the greenback by the end of 2025.
South Korea’s inflation climbs in November, but misses expectations
South Korea's inflation rate climbed in November to 1.5% year on year, from a 45-month low in October, as the country grapples with a weakening Korean won and slowing exports.
The figure was higher than October's inflation reading of 1.3%, and lower than the 1.7% expected by economists polled by Reuters.
Last Thursday, South Korea's central bank unexpectedly cut rates by 25 basis points to 3%, marking the first time that the Bank of Korea had enacted two back-to-back cuts since 2009.
Read the full story here.
Global investors see U.S. equities as more favorable over their international counterparts, Morgan Stanley says
Even global investors are preferring U.S. equities over their international counterparts, according to Morgan Stanley. The firm's global director of research cited recent conversations with investors at an Asia Pacific summit as the source of the information.
"Overall, we expect a balanced earnings recovery across sectors, supported by favorable conditions such as subdued interest rates and broadening EPS growth," the bank wrote in a note from Sunday.
The bank added that it is currently overweight financials in the U.S., citing "anticipated earnings improvement, accelerating capital markets activity, and potential regulatory relaxations post-election." On the other hand, high price levels and interest rates have contributed to an underweight within the U.S. consumer goods sector.
— Lisa Kailai Han
New York Fed President Williams says it will take time to reach 2% inflation goal over long term
New York Federal Reserve President John Williams said Monday that there's more work to be done on the battle against inflation.
"Inflation remains above our 2% longer-run target, and it will take some time to achieve our inflation goal on a sustained basis," he said in prepared remarks delivered in New York.
However, Williams said there are "reasons to be confident" that inflation will hit 2% on an annualized basis, which is the goal of monetary policymakers.
The New York Fed is uniquely important in the Federal Reserve by implementing monetary policy for the Federal Open Market Committee, acting as the main agent for the central bank to intervene in the currency market and because its president is a permanent member of the FOMC.
Williams' remarks come after Fed Governor Christopher Waller said he was expecting another interest rate cut at the central bank's next policy meeting scheduled for later this month. However, Waller said he was concerned about recent inflation trends.
— Alex Harring
The key to the stock market may lie in bonds, JPMorgan technician says
One corner of the bond market is flashing a bullish signal for stocks, according to Jason Hunter, head of technical strategy at JPMorgan.
The 10-year breakeven inflation rate is contained in a range below 2.40% and 2.50%, a suggestion that inflation fears are contained, and is a positive signal for the stock market, Hunter told CNBC's "Closing Bell" on Monday.
"You're already starting to see that broadening and the breadth start to expand," Hunter said.
He expects the next big upside target for the S&P 500 late this year or early next is 6,195. The broad market index was last hovering below 6,050. He's positive on the S&P 500 Equal Weight and Russell 2000.
— Sarah Min
See the stocks moving after the bell
These are some of the stocks moving in after-hours trading on Monday:
- Tesla — The electric vehicle maker slipped 1.7% after a Delaware judge denied the reinstatement of CEO Elon Musk's $56 billion pay package. The judge upheld her prior ruling on the case.
- Zscaler — The cloud security stock dropped 7.2%. Guidance for the fiscal second quarter disappointed investors, as Zscaler sees adjusted earnings ranging from 68 cents to 69 cents per share, roughly in line with analysts' forecasts, per LSEG.
- Credo Technology Group — The technology stock surged 32.8% after the company topped earnings expectations and posted strong guidance for current-quarter revenue. Credo reported 7 cents per share, excluding items, on $72 million in revenue for the second fiscal quarter. Analysts had forecast earnings of 5 cents per share and revenue of $67 million, per LSEG.
— Alex Harring
Stock futures are near flat
Futures tied to the Dow, S&P 500 and Nasdaq 100 were all little changed shortly after 6 p.m. ET Monday night.
— Alex Harring
