new york – U.S. stock indexes fell back on Tuesday, paring some of their strong gains for the year.
The Standard & Poor’s 500 fell 0.4%, but is still close to its all-time high reached earlier this month. The Dow Jones Industrial Average fell 0.6%, and the Nasdaq Composite returned 0.3% from its previous record.
Nvidia, a superstar stock that was a big part of Wall Street’s record-setting year, fell 1.2%. The company’s stock, which is down more than 12% from its record set last month, fell for the eighth time in nine days as moonshot momentum slows.
Like the broader U.S. market, Nvidia’s stock price rose so much that critics warned that expectations were too high and that the stock would only make sense if everything goes as expected from here.
In a survey of fund managers around the world, Bank of America strategists found that many are investing in U.S. stocks and drawing down cash to do so. The study found that fund managers are holding significantly lower amounts of cash in their overall portfolios, similar to 2002 and 2011, which were tough times for risky investments.
Strategist Michael Hartnett said in a report from BofA Global Research that the survey’s broadest measure of optimism, based on economic growth expectations and other indicators, is at its highest level since August 2021. Ta. This is a potentially worrying signal for contrarians.
The S&P 500 index is up nearly 27%, marking one of its best years since the millennium, as the U.S. economy remains remarkably resilient. Although President-elect Donald Trump’s policies will boost growth, hopes are rising that inflation will not be too dire, and the Federal Reserve will ease the situation by lowering interest rates from 20-year highs. It’s starting.
The Federal Reserve is widely expected to announce its third key interest rate cut this year on Wednesday, and officials are also expected to announce their outlook for the direction of interest rates in the coming years.
However, expectations for future interest rate cuts are on the decline, as the inflation rate may continue to exceed the Fed’s 2% target after decelerating sharply from its peak of over 9%.
U.S. retailers’ sales last month exceeded economists’ expectations, according to a report Tuesday. This could indicate that the economy does not need further support from interest rate easing. Lower interest rates could weigh on the economy, but they could also spur inflation further.
“The Fed is still on track to cut interest rates (Wednesday), but stronger economic data will likely halt them in January,” said Chris Larkin, managing director of trading and investments at E.Trade from Morgan. There is a possibility that the possibility of doing so may increase.” Stanley.
In the bond market, US Treasury yields remained relatively stable after the report. As of late Monday, the 10-year U.S. Treasury yield held steady at 4.40%. The yield on the two-year Treasury note, which more accurately reflects expectations for the Fed, fell slightly to 4.24% from 4.25%.
On Wall Street, Broadcom fell 3.9%, its first loss after two big market-leading gains. The company’s stock price soared 24.4% and 11.2% on a day-to-day basis after the company reported earnings that beat analysts’ expectations and forecast future earnings, in part due to demand for its artificial intelligence products.
Broadcom and Nvidia were the two heaviest companies on the S&P 500 on Tuesday.
Pfizer helped limit market losses after rising 4.7%. The company gave a stronger profit outlook for next year than some analysts expected. Other pharmaceutical stocks also rose near the top of the market, including Bristol-Myers Squibb, which rose 3.2%.
Overall, the S&P 500 fell 23.47 points to 6,050.61. The Dow Jones Industrial Average fell 267.58 points to 43,449.90, and the Nasdaq Composite fell 64.83 points to 20,109.06.
In overseas stock markets, London’s FTSE 100 index fell 0.8% ahead of the Bank of England’s interest rate announcement on Thursday.
Japan’s central bank is also scheduled to hold a meeting on interest rates later this week, and the Nikkei Stock Average in Tokyo fell 0.2%. Unlike other banks around the world, the Bank of Japan raises interest rates after years of keeping them below zero.
According to CoinDesk.com, Bitcoin set a record above $108,000 before falling back toward $106,500. It has soared from around $44,000 at the start of the year, riding a wave of recent enthusiasm for Mr. Trump to create a more favorable system for digital currencies.
Cho writes for The Associated Press. Associated Press writer Elaine Kurtenbach contributed to this report.
