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US stocks fell on Tuesday, with the Dow on track to log its biggest losing streak in 46 years.
The Dow Jones Industrial Average (^DJI) slid roughly 0.8% in afternoon trade, coming off an eighth straight day of losses for the blue-chip index.
The last 9-day losing streak for the Dow was Feb. 1978. Prior to that, the index suffered an 11-day losing streak in 1974 and another in 1971.
The other major indexes dropped in tandem on Tuesday with the benchmark S&P 500 (^GSPC) falling around 0.5%, while the Nasdaq Composite (^IXIC) lost about 0.4% after the tech-heavy index closed at a record high on Monday.
Fed policymakers kicked off their final gathering of the year earlier in the trading day, amid almost total conviction that a 0.25% rate cut is coming on Wednesday. Some on Wall Street suspect it could be the last cut for some time, as inflation proves persistent. Given that, the focus is on clues to the path of rates next year — and in January, in particular.
In the meantime, investors assessed a November reading on retail sales for insight into the health of the consumer and the economy. Sales rose 0.7%, faster than the 0.6% month-on-month gain expected, amid strong holiday spending.
Eyes are also on Nvidia (NVDA), down more than 10% from its November record close. The chip giant’s shares fell around 2% in afternoon trade.
Elsewhere, bitcoin (BTC-USD) prices extended their rally to briefly break above $108,000 a token. Prices retreated to just above $106,500 a coin.
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Dow on pace to log biggest losing streak since 1978
The Dow Jones Industrial Average (^DJI) is on pace for its longest losing streak in 46 years.
The blue-chip index slid about 0.8% by afternoon trade on Tuesday, coming off an eighth straight day of losses. The last 9-day losing streak for the Dow was Feb. 1978. Before that, the index suffered an 11-day losing streak in 1974 and another in 1971.
UnitedHealth Group (UNH) was the biggest loser within the Dow, falling over 3%. Goldman Sachs (GS), Salesforce (CRM), and Nvidia (NVDA) followed, each down about 2%.
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All eyes on Nvidia…
Nvidia (NVDA) stock recovered from earlier losses but still traded down over 1% Tuesday as investors grew cautious the AI spending that fueled its rise could ease or spread to rivals.
Shares of the AI chipmaker have fallen over 10% since reaching a record closing high of $148.88 in early November.
Yahoo Finance’s Laura Bratton reports:
Nvidia made a swift ascent to the top, from a graphics card company primarily used for video games to the world’s leading supplier of AI chips, as Big Tech goes all-in on generative artificial intelligence.
In 2024, it traded places with Apple (AAPL) as the world’s most valuable company, and in early November, it replaced the once-dominant Intel (INTC) in the Dow Jones Industrial Average (^DJI). Wedbush analyst Dan Ives said in a note last week he expects Nvidia’s market cap to surpass $4 trillion in 2025.
But following its record close in November, Nvidia shares began to fall after commentary from Microsoft (MSFT) and Google (GOOG) indicated that their AI spending will grow at a slower pace in the future.
Rumors of overheating with its latest Blackwell AI servers stoked fears of further delays to the production ramp up, sending shares down even more. Even Nvidia’s most recent blowout earnings report, which surpassed bullish analysts’ already-high expectations, did little to help the stock’s trajectory.
Adding to Nvidia’s troubles, China’s competition authority last week said it has launched an antitrust probe into Nvidia’s $7 billion acquisition of networking technology company Mellanox.
Meanwhile, the competition is heating up with names like Amazon (AMZN) and Broadcom (AVGO) developing and rolling out their own respective chips.
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Bitcoin prices surge to another record
Bitcoin (BTC-USD) prices surged to another record on Tuesday, briefly touching above $108,000 early Tuesday before retreating to just around $107,000 by mid-afternoon.
The largest cryptocurrency by market value has enjoyed a sizable rally following Donald Trump’s presidential win, rising over 50% since that time.
Trump’s win pushed bitcoin prices to all-time highs in the immediate aftermath of the election, with the administration viewed as generally more friendly to the alternative asset class.
In July, Trump attended a bitcoin conference in Nashville and has since pledged to usher in more supportive regulation. His promises also included appointing a crypto Presidential Advisory Council and firing current SEC Chair Gary Gensler, who announced he would step down on Jan. 20.
Despite bitcoin’s moves to the upside on Tuesday, other smaller cryptocurrencies and crypto-adjacent names moved lower.
Ethereum (ETH-USD) fell about 1% to trade above $3,900 a coin.
Meanwhile, shares of MicroStrategy (MSTR), which owns nearly 280,000 bitcoins, dropped around 4%. The company recently announced the purchase of an additional 51,780 bitcoins for $4.6 billion. MicroStrategy now holds $16.5 billion worth of bitcoin.
Coinbase (COIN), which allows crypto trading on its platform, saw shares fall roughly 1%.
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The ‘hard landing’ calls continue to fade
Bank of America’s latest fund manager’s survey could be summed in up three words from BofA investment strategist Michael Hartnett: “super-bullish sentiment.”
Respondents are bullish about US stocks, flashing the largest percentage of respondents overweight US equities on record. They’re bullish about equities in general, with global risk appetite at a three-year high and investors’ allocation to cash sitting at a three-year low.
And they’re increasingly bullish that the global economy won’t enter recession in 2025. Just 6% of respondents said they see a “hard landing” — where higher rates help tip the economy into an outright downturn — in the next 12 months. This marked the lowest number of respondents to call for a hard landing in six months.
This reflects the broad consensus on Wall Street that, at least in the US, above-trend growth is largely expected in 2025. But as we wrote in Tuesday’s Morning Brief, when everyone’s on one side of an argument, it often raises eyebrows from strategists and economists.
“My concern dial has gone up a little bit,” Renaissance Macro’s head of economics Neil Dutta wrote in a note to clients on Tuesday morning. “Two years ago, back in 2022, I recall the consensus was largely on the recession train for the coming year (I took the other side) even though labor markets were fine and homebuilding stocks were outperforming despite rate hikes.
“Today, the consensus is fairly sanguine on growth next year. However, labor markets have been cooling and homebuilding stocks are presently underperforming despite rate cuts. I see myself on the more cautious side of the consensus at present.”
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Tesla’s race to the top
Telsa (TSLA) — now less than $100 billion away from eclipsing the market cap of Facebook owner Meta (META) — continued to enjoy a massive rally on Tuesday.
Shares of the EV maker rose as much as 4.5%, boosting its market cap to around $1.54 trillion. The uptick in the stock price comes after Mizuho upgraded the company to Outperform from Neutral with a price target of $515 a share, up from the prior $230.
The firm cited a looser regulatory framework as a tailwind for shares in 2025 following Donald Trump’s presidential win. Musk, a close ally of Trump, will co-head the new “Department of Government Efficiency” in the president-elect’s second term.
Meta, which has a market cap of about $1.57 trillion, fell nearly 1% in late morning trade.
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Market rally appears ‘vulnerable’ heading into 2025
Nvidia (NVDA) stock continued to slide on Tuesday after shares fell more than 10% from a November record close. The chip giant’s stock dropped nearly 3% in early trade before bouncing off of its session lows.
The moves echoed a decline across all three major indexes, which have taken a breather as investors debate what could happen to the US economy in 2025.
“This rally, which has been really dramatic since July, is starting to look a little bit vulnerable,” James Demmert, chief investment officer at Main Street Research, told Yahoo Finance’s Morning Brief.
“So going into 2025, I think investors should start to prepare themselves emotionally for a normal correction of 8% to 12% in markets,” he cautioned.
Demmert, who said the Federal Reserve “is probably already at the neutral rate” and likely won’t need to cut interest rates much more from here, also touched on market breadth in the new year after the rapid rise in mega-cap Big Tech stocks.
According to the latest Bank of America Fund Manager Survey, “long Magnificent 7 is considered the most crowded trade,” per 57% of surveyed investors.
“It’s been such a Mag 7 market,” Demmert said. “In 2025, we think those stocks do well, but other stuff will also do well or better” amid more attractive valuations and AI-driven use cases, which are expected to fuel earnings.
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Homebuilders confidence flat in December amid rate uncertainty
Homebuilder confidence was flat in December from the previous month and came in lower than analyst estimates amid uncertainty over how quickly mortgage rates will decline.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index stayed at 46 in December, lower than economists’ estimates of 47, per Bloomberg data.
Any reading under 50 indicates more builders view conditions as poor rather than good.
“While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election,” NAHB chairman Carl Harris, a custom home builder from Wichita, Kan., said in a press statement. “This is reflected in the fact that future sales expectations have increased to a nearly three-year high.”
Mortgage rates have dropped for the last three consecutive weeks, with the average 30-year mortgage rate holding at 6.6%, according to Freddie Mac.
There’s a growing expectation that the Federal Reserve will cut the federal funds rate by 25 basis points at the conclusion of its meeting on Wednesday. The decrease has already been baked into current mortgage interest rates, so housing experts don’t expect mortgage rates to drop further.
NAHB chief economist Robert Dietz wrote, “Concerns over inflation risks in 2025 will keep long-term interest rates, like mortgage rates, near current levels with mortgage rates remaining above 6%.”
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Stocks open lower ahead of Fed meeting kickoff
US stocks fell on Tuesday as investors look ahead to the start of the last Federal Reserve policy meeting of the year, with all bets pointing to a 25 basis point interest rate cut.
The Dow Jones Industrial Average (^DJI) slid roughly 0.5%, coming off an eighth straight day of losses for the blue-chip index. The benchmark S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) also lost about 0.5%. The Nasdaq closed at a record high on Monday.
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November retail sales top Wall Street’s expectations
November retail sales grew at a faster pace than Wall Street analysts had expected, reflecting continued resilience in the American consumer and indicating that the holiday shopping season in the US is off to a strong start.
Retail sales rose 0.7% in November. Economists had expected a 0.6% rise in spending, according to Bloomberg data. Meanwhile, retail sales in October were revised up to a 0.5% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data. A 2.4% month-over-month increase in motor vehicle and auto parts sales, as well as a 1.8% increase in online sales, drove the gains.
November sales, excluding auto and gas, rose 0.2%, below consensus estimates for a 0.4% increase. The control group in Tuesday’s release, which excludes several volatile categories and factors into the Gross Domestic Product reading for the quarter, increased by 0.4%, in line with estimates.
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