US Stocks End Lower Amid Caution Ahead of Consumer Inflation Report
US stocks ended lower on Tuesday as investors exercised caution ahead of a pivotal consumer inflation report set to shape expectations for future Federal Reserve interest rate decisions.
Market Performance
The Dow Jones Industrial Average fell 154.10 points, or 0.35 per cent, to 44,247.83. The S&P 500 sank 17.94 points, or 0.30 per cent, to 6,034.91. The Nasdaq Composite Index shed 49.45 points, or 0.25 per cent, to 19,687.24.
Sector Performance
Eight of the 11 primary S&P 500 sectors ended in red, with real estate and technology leading the laggards by losing 1.63 per cent and 1.26 per cent, respectively. Meanwhile, communication services and consumer staples led the gainers by going up 2.61 per cent and 0.50 per cent, respectively.
Sector Divergence
Paul Hickey of Bespoke Investment Group noted an "extreme" short-term divergence among sectors in the past five days, despite the major US indexes generally moving in sync.
"Recently, the disparity between index and sector performance has become extremely disjointed," Hickey wrote.
"Through yesterday’s close, the S&P 500 was up 0.1 per cent in the trailing five trading days, but eight out of eleven sectors were down over 1 per cent. That’s practically unheard of."
Corporate News
Shares of Alphabet, Google’s parent company, climbed 5.59 per cent after the tech giant revealed a breakthrough in quantum computing with its new chip, Willow, unveiled on Monday. The announcement highlighted Google’s progress in this emerging field as it seeks to compete with other major players.
Walgreens Boots Alliance surged 17.74 per cent following a report from The Wall Street Journal that Sycamore Partners, a private-equity firm, is in talks to acquire the pharmacy chain. Despite the jump, Walgreens shares remain significantly down for the year, reflecting challenges from declining foot traffic as more consumers shift to online shopping.
Bond Market
In the bond market, the US Treasury yields edged higher as traders awaited the consumer price index (CPI) release on Wednesday, which could significantly influence monetary policy ahead of next week’s Fed meeting.
Fed Rate Cut Expectations
The market continues to anticipate a potential 25-basis-point rate cut at the upcoming meeting, with expectations bolstered by last Friday’s jobs report, which showed an uptick in unemployment to 4.2 per cent.
Conclusion
US stocks ended lower on Tuesday as investors exercised caution ahead of a pivotal consumer inflation report. The market continues to anticipate a potential 25-basis-point rate cut at the upcoming Fed meeting, with expectations bolstered by last Friday’s jobs report.
FAQs
Q: What happened to the US stock market on Tuesday?
A: The Dow Jones Industrial Average fell 154.10 points, or 0.35 per cent, to 44,247.83. The S&P 500 sank 17.94 points, or 0.30 per cent, to 6,034.91. The Nasdaq Composite Index shed 49.45 points, or 0.25 per cent, to 19,687.24.
Q: Which sectors performed poorly on Tuesday?
A: Eight of the 11 primary S&P 500 sectors ended in red, with real estate and technology leading the laggards by losing 1.63 per cent and 1.26 per cent, respectively.
Q: What is the current expectation for the Fed rate cut?
A: The market continues to anticipate a potential 25-basis-point rate cut at the upcoming meeting, with expectations bolstered by last Friday’s jobs report, which showed an uptick in unemployment to 4.2 per cent.