NEW YORK (AP) — U.S. stock indexes are edging back on Tuesday and trimming some of their stellar gains for the year.
The S&P 500 fell 0.5% in early trading, though it’s still near its all-time high set earlier this month. The Dow Jones Industrial Average was down 188 points, or 0.4%, as of 9:35 a.m. Eastern time, and the Nasdaq composite slipped 0.6% 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 2.9% to weigh on the market. It’s on track for an eighth loss in the last nine days and has dropped more than 10% from its record set last month, as its rocket-ship momentum slows.
Like the overall U.S. market, Nvidia’s stock has climbed so much that critics warn expectations have become too high and that the stock price makes sense only if everything goes correctly 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 economic growth expectations and other indicators, is at its highest since August 2021, strategist Michael Hartnett said in a BofA Global Research report.
The S&P 500 is on track for one of its best years since the millennium 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 a third cut 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 to be more stubborn to slow the last bit down to the Fed’s 2% target.
A report on Tuesday showed sales at U.S. retailers grew more last month than economists expected, which could be an indication of an economy that doesn’t need more help from lower interest rates.
In the bond market, Treasury yields held relatively steady following the report. The 10-year Treasury yield edged down to 4.39% from 4.40% late Monday. The two-year yield, which more closely tracks expectations for the Fed, held at 4.25%, where it was late Monday.
On Wall Street, Pfizer stock rose 4.1% after giving a forecast for profit next year that was stronger than some analysts’.
Broadcom fell 3.7% and was heading for its first loss following two big gains. It leaped 24.4% and then 11.2% in consecutive days after delivering a stronger profit report than analysts expected and giving a forecast for upcoming revenue that was also encouraging thanks to demand for its artificial-intelligence products.
In stock markets abroad, London’s FTSE 100 slipped 0.6% 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.
AP Business Writer Elaine Kurtenbach contributed.
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