Market Momentum Slows as Investors Take Profits
The US stock market experienced a slight correction on Tuesday, with major indexes retreating from their recent record highs. The S&P 500 index slipped 0.4%, while the Dow Jones Industrial Average dropped 267 points, or 0.6%. The Nasdaq composite also gave back 0.3% from its record set the previous day.
Nvidia’s Stellar Run Hits a Speed Bump
Nvidia, a key driver of Wall Street’s recent rally, fell 1.2% on Tuesday, marking its eighth loss in nine days. The stock has dropped over 12% from its record high set last month, as investors take profits and reassess their expectations. Critics have warned that Nvidia’s stock price is only justified if everything goes right for the company from here.
Fund Managers Bet Big on US Stocks
Despite the recent correction, global fund managers remain bullish on US stocks. According to a survey by Bank of America, many are pouring into US equities and reducing their cash reserves. This optimism is reflected in the S&P 500’s strong performance this year, with the index up nearly 27% year-to-date.
Economic Indicators Send Mixed Signals
The US economy has shown remarkable resilience, with hopes high that President-elect Donald Trump’s policies will boost growth without sparking inflation. However, a report on Tuesday showed that retail sales strengthened more than expected last month, which could indicate that the economy doesn’t need further stimulus from the Federal Reserve.
Interest Rate Expectations Shift
The Fed is widely expected to announce its third interest rate cut of the year on Wednesday, but expectations for future cuts have been dwindling. Inflation remains a concern, and strong economic data could lead the Fed to pause rate cuts in January. In the bond market, Treasury yields held steady, with the 10-year yield at 4.40% and the two-year yield at 4.24%.
Tech Stocks Take a Hit
Broadcom fell 3.9% on Tuesday, following two big gains earlier in the week. The tech company’s stock had leaped 24.4% and 11.2% in consecutive days after delivering a strong profit report and forecast. Nvidia and Broadcom were the two heaviest weights on the S&P 500 on Tuesday.
Pharmaceutical Stocks Shine
Pfizer rose 4.7% after giving a stronger-than-expected forecast for profit next year. Other pharmaceutical stocks, including Bristol-Myers Squibb, also performed well, helping to limit the market’s losses.
Global Markets React
In stock markets abroad, London’s FTSE 100 fell 0.8% ahead of an announcement on interest rates by the Bank of England on Thursday. Japan’s central bank will also meet on interest rates later this week, and Tokyo’s Nikkei 225 slipped 0.2%. Bitcoin set a record above $108,000 before pulling back, riding a wave of enthusiasm that Trump will create a system more favorable to digital currencies.
Leave a Reply