A trader reacts during the opening bell at the New York Stock Exchange (NYSE) in New York City.
The Dow Jones Industrial Average was threatening to enter the history books on Tuesday with its first 9-day losing streak since the 1970s in sight.
The 30-stock average shed 215 points, or 0.5%. The S&P 500 lost 0.5% along with the Nasdaq Composite.
The Dow's losing streak began the day after it closed above 45,000 for the first time ever earlier in the month.
The Dow anomaly comes at a time when the broader market is doing well. The S&P 500 hit a new high on Dec. 6 and sits less than 1% from that level. The Nasdaq hit a record on Monday.
Driving the Dow's losses has been a rotation into technology stocks and out of some of the more old economy stocks that gained in November following the reelection of Donald Trump. Those stocks dominate the Dow, rather than tech.
What's strange however is that Nvidia, a new tech member of the Dow that joined last month, has also struggled despite the tech sector's recent gains, slipping into correction territory Monday.
Meanwhile Broadcom has been surging to new highs, with investors finding a new chip stock to love. And Alphabet, Apple and Tesla also hit new records on Monday. Tesla was higher Tuesday, though Broadcom shed 3.6%.
Money Report
Some of the concern driving some profit-taking in the non-technology stocks centers around the upcoming Federal Reserve interest-rate decision on Wednesday. Traders are pricing in a 97% chance of a quarter-point cut, according to CME Group's Fed Watch tool, however there's concern among investors and economists that the central bank could be making a mistake and risking a stock market bubble or sparking more inflation.
"While we expect the Federal Reserve to proceed with its telegraphed 25 basis point rate cut on Wednesday, as recent data was not inflationary enough to change course for December, we expect the Fed's 2025 dot plot and guidance to be much more hawkish, suggesting a moderation in the pace of rate cuts for 2025," said Chris Brigati, chief investment officer at SWBC.
November's retail sales figure out Tuesday came in better than economists expected, adding to concern that the Fed may be taking unnecessary action.
Retail sales were better than expected in November
Consumers spent more than expected in November and kept ahead of inflation, the Census Bureau reported Tuesday.
Retail sales rose a seasonally adjusted 0.7% for the month, an acceleration from the upwardly revised 0.5% in October and better than the Dow Jones estimate for 0.5%. Excluding autos, sales increased 0.2%, a touch below the 0.3% estimate. The numbers are not adjusted for inflation, so the spending pace was ahead of the 0.3% increase in the consumer price index.
A 2.6% increase in motor vehicle and parts sales paced the spending, while online shopping rose 1.8%. Miscellaneous sales tumbled 3.5%.
On a 12-month basis, receipts were up 3.8%, ahead of the 2.7% CPI inflation rate.
—Jeff Cox
Stocks fall, Dow headed for ninth-straight losing session
Stocks opened lower on Tuesday while the Dow Jones Industrial Average pulled back for a ninth-straight session on the eve of the Federal Reserve interest rate decision.
The 30-stock Dow pulled back 208 points, or 0.4%. The S&P 500 slipped 0.4%, while the Nasdaq Composite also fell 0.4%.
— Brian Evans
See the stocks moving in premarket trading
These are some of the stocks moving before the bell:
- Pfizer — The drugmaker climbed 2.4% after releasing a 2025 forecast that matched Wall Street expectations.
- SolarEdge Technologies — The clean energy stock jumped 12% on the back of Goldman Sachs' double upgrade to buy from sell.
- Tesla — Shares popped 2.3% after an upgrade at Mizuho, who said the electric vehicle maker can benefit from President-elect Donald Trump's proposed policies.
— Alex Harring
The first year of presidential terms have been the best for equities in recent history, says Strategas
The first year of President-elect Donald Trump's term could be a boon for markets if recent history is any guide, according to Strategas.
"Since 2005, the best year for market returns has been the first year of a presidential term and by an enormous margin," Strategas CEO Jason De Sena Trennert wrote in a Monday note.
It is more difficult to use historical analogs today than it was in the past given the ease with which politicians from both sides of the political aisle spend taxpayer's money – and then some," he continued. "Perhaps all this will change in a new Trump administration purportedly focused on rooting excess government spending – but it won't be without a fight."
— Brian Evans
European stocks trade mostly lower — but France and Germany up despite uncertainty
European markets traded mostly in negative territory Tuesday, France and Germany's stock markets were higher, despite political uncertainty in both countries.
The pan-European Stoxx 600 index traded 0.4% lower by mid-morning, as most sectors lost ground. Most major European bourses were also lower.
Germany's DAX index was trading 0.2% higher in the wake of Chancellor Olaf Scholz losing a confidence vote in the German parliament on Monday, which paves the way for a snap election on Feb. 23. Scholz had wanted to lose the vote in order for fresh elections to be triggered, following the collapse of his coalition government last month.
A focal point for European markets is the Federal Reserve's policy meeting this week, as well as the Bank of England's meeting Thursday. Markets are so far pricing in only a slim chance of a final rate cut of the year from the British central bank.
The U.K.'s FTSE 100 index was 0.8% lower after U.K. data showed wage growth accelerated by more than expected in the three months to October. The print prompted investors to rein in bets on BOE interest rate cuts next year.
— Holly Ellyatt
Market focus shifting away from Trump's 'virtues', says Vital Knowledge
The initial excitement around Donald Trump's re-election is dissipating, according to Adam Crisafulli of Vital Knowledge.
"The market's underlying mood has been deteriorating for a few days, and it crumbled further on Monday, with investors growing increasingly concerned about poor breadth and shifting their focus away from Trump's virtues (deregulation, tax relief) and toward his potential headwinds (higher deficits, tariffs, etc.)," he wrote in a note.
"Meanwhile, the approaching pivot in Fed policy is another factor feeding into the more cautious narrative, with the market pricing in a dramatic slowdown in the pace of easing (with the 25bp cut due on Wed, the Fed will have slashed rates by 100bp since Sept, or an annualized pace of 300bp, but the Street is currently assuming just 50bp for all of 2025)," he said.
— Fred Imbert
German government failure and February snap election are headwinds for Eurozone stocks: Capital Economics
The failure of German Chancellor Olaf Scholz's government in a parliamentary confidence vote and elections tentatively set for Feb. 23 mean more challenges for euro-zone stocks markets, according to Capital Economics senior economist Hubert de Barochez.
The German DAX index has climbed 22% so far in 2024, but the economist entitled a research report after the Bundestag vote, "Headwinds to euro-zone stock markets to blow harder."
"While equities in Germany have managed to ride out weak growth and political uncertainty this year, those in France have not. We suspect that they will all fare poorly next year, as those adverse conditions remain and a trade war takes a toll," the economist wrote.
The European Central Bank can't undertake the policies necessary to revive the European economy, Capital Economics said. "Individual governments are arguably the best placed to drive a turnaround in the economy," de Barochez wrote. "But most of them seem either unable or unwilling to do so, and in particular those in the two biggest economies: Germany and France."
— Scott Schnipper
Risk commentary may overshadow Fed dot plot this week, State Street strategist says
Wednesday's Fed decision will come with an updated summary of economic projections from FOMC members, including a new "dot plot" that projects the path of interest rate cuts.
However, the more interesting output from the meeting could be commentary about how the central bank views the risks of inflation and a potential rise in unemployment, said Cayla Seder, macro multi-asset strategist at State Street.
"The December SEP is interesting in that the soonest date is a whole year away. A lot can happen in a single year, so where I think we'll get a bit more color and a bit more clarity is actually in the text around the SEP as opposed to the dots themselves," Seder said.
One area of the dot plot that could be impactful is the final point, representing the terminal rate. A move higher could indicate that Fed officials think the so-called neutral interest rate is higher than they previously thought.
"We've consistently seen that rise. I think that's one thing that would hint at a hawkish cut," Seder added.
— Jesse Pound
Stock futures open little changed
Stock futures opened little changed Monday evening.
Futures tied to the Dow Jones Industrial Average dipped 45 points, or 0.1%. S&P 500 futures edged down 0.1%, while Nasdaq-100 futures hovered near the flatline
— Samantha Subin
