NEW YORK: Wall Street’s main indexes fell on Tuesday, as investors turned cautious ahead of the Federal Reserve’s last interest rate announcement of the year following stronger-than-expected retail sales data.
US retail sales increased more than expected in November amid an acceleration in motor vehicle purchases, consistent with strong underlying momentum in the economy.
The market’s focus was squarely on the Fed’s monetary policy decision on Wednesday, where a 25 basis point cut is all but priced in.
However, investors will watch policymakers’ forecasts for signals on whether they will be more cautious in 2025, as economic indicators point to continued resilience and inflation remains persistent.
“There are some jitters ahead of the this interest rate decision ... the worry is that this is a hawkish cut, implying they are done for a while,” said Ryan Detrick, chief market strategist at the Carson Group.
The US 10-year Treasury note yield eased off the day’s highs, but was still hovering around its highest levels in three weeks, pressuring rate-sensitive equities.
Other analysts said traders were likely booking some profits after the Nasdaq hit a record high in the previous session.
Seven of the 11 S&P 500 sectors were lower with energy stocks down 1.3%, tracking losses in oil prices.
Rate-sensitive megacap and growth stocks were mixed, with AI giant Nvidia dropping 1.7% and on track for a fourth straight session of losses, while Apple rose 0.8%.
At 12:03 p.m. ET, the Dow Jones Industrial Average fell 203.25 points, or 0.46%, to 43,514.23, the S&P 500 lost 23.96 points, or 0.38%, to 6,050.81 and the Nasdaq Composite lost 88.36 points, or 0.44%, to 20,085.54.
The Dow was on course for its ninth consecutive session of losses, which would be its worst losing streak since 1978.
The CBOE Volatility Index, Wall Street’s “fear gauge”, rose above 15 for the first time in nearly three weeks, and the small-cap Russell 2000 dropped nearly 1%.
Still, US stocks remain on track to end December on a positive note with the S&P 500 set for its best year since 2019 with a near 27% year-to-date rise, powered by gains in technology companies, Fed rate cuts and optimism on the impact of President-elect Donald Trump’s corporate policies.
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