Dow snaps three-day winning streak as investors await inflation data, earnings
U.S. stocks ended mostly lower on Tuesday as investors rethink the chances of a interest-rate cut by the Federal Reserve in the near term and await new inflation data and earnings results later in the week.
How stocks traded
-
The Dow Jones Industrial Average
DJIA
fell 157.85 points or 0.4% to end at 37,525.16 -
The S&P 500
SPX
shed 7.04 points or 0.2% to finish at 4,756.50 -
The Nasdaq Composite
COMP
gained 13.94 points or 0.1% to close at 14,857.71
On Monday, the Dow Jones Industrial Average rose 217 points, or 0.58%, to 37,683; the S&P 500 increased 66 points, or 1.41%, to 4,764; and the Nasdaq Composite gained 320 points, or 2.2%, to 14,844.
What drove markets
Stocks closed mostly lower Tuesday after a Monday jolt higher.
The Federal Reserve still remained the biggest plot theme Tuesday, said Sonu Varghese, vice president, global macro strategist at Carson Wealth.
The market is pricing in a 59% chance that the Federal Reserve will start lowering interest rates at its March policy meeting, according to the CME FedWatch tool. That’s down from a nearly 70% chance one week ago.
“We’re a long way from saying March is a certainty and I think the market is coming to terms with that,” Varghese said.
Read also: Why stock-market bulls should be careful what they wish for on Fed rate cuts
There has been tax-motivated profit-taking that’s occurring with the flip into 2024, Varghese said. There also has been selling on the idea that perhaps Wall Street was getting too optimistic late last year about the pace and extent of interest rate cuts this year, he added.
On Monday, Federal Reserve Governor Michelle Bowman said inflation could retreat without further rate hikes but the economy wasn’t at a point yet where rate cuts were needed, she said.
A key update on inflation will come on Thursday, when the consumer-price index for December will be released.
Meanwhile, earnings season kicks off on Friday with quarterly results from the big banks.
Though some of the bigger data points are coming at the end of the week, investors still had economic data on Tuesday to consider. The trade deficit narrowed 2% to $63.2 billion in November. The deficit is shaping up to be the smallest in three years.
“In the upcoming months, continued high energy exports are expected to continue to shrink the U.S. trade deficit,” according to Louis Navellier, chairman and founder of Navellier & Associates.
Companies in focus
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Juniper Networks Inc.
JNPR,
+21.81%
shares are 21.8% higher Tuesday after a report that Hewlett Packard Enterprise Co. is in advanced talks to buy the business, which has a communications networking business and an artificial intelligence business known as Mist AI. -
Netflix Inc.
NFLX,
-0.61%
shares are off 0.6% following a downgrade to neutral from buy, according to Citi analysts. The streaming giant still kept its $500 price target.
— Jamie Chisholm contributed.
