Following an early downturn, the stock market experienced persistent weakness throughout Tuesday’s trading session. The technology-heavy indices retreated from their record highs of the previous day, while the Dow Jones Industrial Average ended lower for the ninth consecutive session, a streak not seen since 1978.
The primary indexes showed slight recovery before closing but remained negative. The Dow Jones decreased by 267.58 points, or 0.6%, to finish at 43,449.90. The Nasdaq fell by 64.83 points, or 0.3%, settling at 20,109.06, and the S&P 500 dropped 23.47 points, or 0.4%, closing at 6,050.61.
The downturn can be attributed in part to a reversal in technology stocks, which had fueled gains in the previous session. Networking stocks notably declined, with the NYSE Arca Networking Index plummeting by 2.2% following a record high on Monday.
A similar downward trend was observed in semiconductor stocks, as indicated by the 1.6% decrease in the Philadelphia Semiconductor Index. Broadcom (AVGO) shares retreated from a recent upswing, while Nvidia (NVDA) continued to slide after moving into contraction territory on Monday.
Beyond the technology sector, financial stocks also showed considerable weakness, impacting both the NYSE Arca Broker/Dealer Index and the KBW Bank Index, which fell by 1.5%. Telecom, housing, and steel stocks also declined, although pharmaceutical stocks resisted the trend, driven by a 4.7% rise in Pfizer (PFE) shares following a revenue forecast for 2025 that met analyst expectations.
Moreover, investors were closely monitoring the Federal Reserve's forthcoming monetary policy announcement scheduled for Wednesday. Although a quarter-point rate reduction by the Fed was widely anticipated, investors were likely to scrutinize the accompanying statement and the Fed officials’ latest economic forecasts, especially in terms of interest rate projections.
Recent data indicating persistent inflation has raised concerns that the Fed might lower rates more slowly than previously expected in the coming year. Further complicating the rate outlook, the Commerce Department's report released early Tuesday showed stronger-than-anticipated retail sales growth for November.
"This report will likely contribute to the Fed's ongoing discussions about the policy trajectory for 2025," stated Jeffrey Roach, Chief Economist at LPL Financial. "Unless there's a significant weakening in the labor market, investors should expect some rate easement by the Fed next year, but probably not as much as initially hoped."
In other markets, the Asia-Pacific region saw mixed performance on Tuesday, with Japan's Nikkei 225 Index dipping 0.2% and China's Shanghai Composite Index falling 0.7%, whereas Australia's S&P/ASX 200 Index rose 0.8%.
European stocks predominantly moved lower, with the U.K.'s FTSE 100 Index dropping 0.8% and Germany's DAX Index declining 0.3%. Conversely, France's CAC 40 Index slightly defied the downtrend, inching up 0.1%.
In the bond market, U.S. treasuries exhibited modest strength following a relatively flat performance in the prior session. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, decreased by 1.2 basis points to 4.385%.
As we look ahead, Wednesday's market activity will likely hinge on reactions to the Fed's monetary policy decision and their latest economic projections.
The material has been provided by InstaForex Company -
www.instaforex.com
