Stock market today: Wall Street trims its stellar gains as Nvidia's star dims again
NEW YORK (AP) — U.S. stock indexes pulled back on Tuesday to trim some of their stellar gains for the year.
The S&P 500 slipped 0.4%, though it’s still near its all-time high set earlier this month. The Dow Jones Industrial Average dropped 267 points, or 0.6%, and the Nasdaq composite gave back 0.3% from its record set the day before.
Nvidia, the superstar stock that’s been a big reason for Wall Street’s run to repeated records this year, fell 1.2% to weigh on the market. It’s the eighth loss in nine days for the stock, which has dropped more than 12% from its record set last month, as its moonshot momentum slows.
Like the overall U.S. market, Nvidia’s stock had climbed so much that critics warned expectations had become too high and that the stock price makes sense only if everything goes correctly for it from here.
Across a survey of global fund managers, strategists at Bank of America found many plowing into U.S. stocks and pulling out of their cash reserves to do so. The survey found fund managers are holding a notably small percentage of their overall portfolios in cash, similar to 2002 and 2011, which preceded tougher times for riskier investments.
The survey’s broadest measure of optimism, based on expectations for economic growth and other indicators, is at its highest level since August 2021, strategist Michael Hartnett said in a BofA Global Research report. That’s a potentially concerning signal for contrarians.
The S&P 500 is on track for one of its best years since the millennium, up nearly 27%, because the U.S. economy has remained remarkably resilient, hopes are high that President-elect Donald Trump’s policies will boost growth but not inflation too badly and the Federal Reserve has begun to make things easier by cutting interest rates from a two-decade high.
The Fed is widely expected to announce the third cut of the year to its main interest rate on Wednesday, and officials are also scheduled to unveil projections about where they see rates heading in upcoming years.
Expectations for coming cuts have been on the downswing, though, as inflation looks like it could stubbornly stick above the Fed’s 2% target after slowing sharply from its peak above 9%.
A report on Tuesday showed sales at U.S. retailers strengthened by more last month than economists expected. That could be an indication of an economy that doesn’t need much more help from easier interest rates. While lower rates can goose the economy, they can also give inflation more fuel.
“The Fed is still on track to cut rates (Wednesday), but more strong economic data could make it more likely they’ll pause in January,” according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.
In the bond market, Treasury yields held relatively steady following the report. The 10-year Treasury yield held at 4.40%, where it was late Monday. The two-year yield, which more closely tracks expectations for the Fed, edged down to 4.24% from 4.25%.
On Wall Street, Broadcom fell 3.9% for its first loss following two big gains where it had led the market. The tech company’s stock leaped 24.4% and then 11.2% in consecutive days after delivering a profit report and a forecast for upcoming revenue that topped analysts' expectations, in part because of demand for its artificial-intelligence products.
Broadcom and Nvidia were the two heaviest weights on the S&P 500 Tuesday.
Pfizer helped limit the market’s loss after rising 4.7%. It gave a forecast for profit next year that was stronger than some analysts’ estimates. Other pharmaceutical stocks were also near the front of the market, including a 3.2% gain for Bristol-Myers Squibb.
All told, the S&P 500 slipped 23.47 points to 6,050.61. The Dow Jones Industrial Average dropped 267.58 to 43,449.90, and the Nasdaq composite dipped 64.83 to 20,109.06.
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%. Unlike others around the world, the Bank of Japan is raising rates after keeping its policy rate below zero for years.
Bitcoin set a record above $108,000 before pulling back toward $106,500, according to CoinDesk.com. It’s catapulted from roughly $44,000 at the start of the year, riding a recent wave of enthusiasm that Trump will create a system that’s more favorable to digital currencies.
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AP Business Writer Elaine Kurtenbach contributed.
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