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The roaring rally in US stocks lost steam on Tuesday as investors assessed whether buying has been overdone and what President-elect Donald Trump’s Cabinet picks mean for policy.
The Dow Jones Industrial Average (^DJI) slid about 0.6%, or roughly 250 points. The S&P 500 (^GSPC) fell almost 0.4%, and the tech-heavy Nasdaq Composite (^IXIC) slipped 0.2%. Boeing (BA) was a laggard in the Dow, falling as much as 3%, as the company posted sharp declines in October due to worker strikes.
The breather in equities came as Treasury yields ticked higher. The 10-year Treasury yield (^TNX) added about 13 basis points to hit about 4.43%.
Wall Street analysts are signaling that the post-election surge in stocks could soon sputter after lifting the major gauges to record highs. Investors have raised their exposure to US stocks to an 11-year high, Bank of America found, and those bullish bets lay the ground for profit taking, Citi strategists said.
At the same time, the market is pondering the policy impact of Trump’s likely Cabinet picks. Florida Sen. Marco Rubio has been tapped for secretary of state, joining other high-profile China hawks on the team. The prospect of tougher tariffs dragged on Chinese stocks and gave weight to worries that the next president’s economic plans could spur inflation.
Bitcoin’s (BTC-USD) record-breaking rally put the cryptocurrency within reach of touching $90,000 at one point early Tuesday before its pace slackened. The token was last trading near $88,000.
Other “Trump trades” lost some fizz. Tesla’s (TSLA) stock slipped into the red Tuesday after soaring thanks to CEO Elon Musk’s alliance with the incoming president. Crypto-linked stocks Coinbase (COIN) struggled for gains after large increases over the past several sessions.
Focus is starting to turn to Wednesday’s report on the Consumer Price Index for October, which will be watched for signs that inflation is cooling as the Federal Reserve desires.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
LIVE 14 updates
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An inflation surprise could keep Fed on hold in December: Fed’s Kashkari
Federal Reserve Bank of Minneapolis President Neel Kashkari said at Yahoo Finance Invest on Tuesday that a surprise to the upside in inflation data between now and the Fed’s December meeting could prompt the central bank to pause cutting interest rates.
“It’d be hard to imagine the labor market really heats up between now and December,” Kashkari said. “There’s just not that much time. I think there’d have to be a surprise on the inflation front to change the outlook so dramatically.”
As of Tuesday, markets are pricing in a 59% chance the Federal Reserve cuts interest rates at its December meeting, per the CME FedWatch Tool.
The first inflation reading from the month of October is set to greet investors on Wednesday morning with the release of the Consumer Price Index (CPI). Yahoo Finance’s Alexandra Canal has the full preview on what economists to be a report that’s “unlikely to show much progress.”
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Boeing stock slides as company posts sharp decline in October deliveries due to strike
Boeing (BA) stock sank as much as 3% Tuesday as the company said it handed over just 14 commercial planes in October, marking a sharp decline from the 34 aircraft it delivered during the same month last year as a seven-week strike by its biggest union crippled much of its production.
The drop in deliveries underscores production setbacks during the strike, which ended last week but cost Boeing an estimated billions in lost earnings and temporarily stalled its turnaround efforts.
Last week members of the International Association of Machinists and Aerospace Workers (IAM) voted in favor of Boeing’s revised contract offer, and employees were told to go back to work by Tuesday, Nov. 12, at the latest.
It will be several weeks before factories can fully restart airplane production as there are multiple steps involved in the process, said the manufacturer on Tuesday.
Boeing said it booked 63 gross orders in October and had zero cancellations.
Read more here.
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Bank of America CEO: ‘An independent central bank is a good place to be’
Federal Reserve chairman Jerome Powell has been rather clear that he won’t let President-elect Donald Trump influence the central bank’s monetary policy decisions.
On Tuesday at Yahoo Finance Invest, Bank of America (BAC) CEO Brian Moynihan supported that stance.
“At the end of the day, I think that our Federal Reserve [as] an independent central bank, is a good place to be,” Moynihan said. ” With the purview of Congress overlooking it by who they appoint and by the annual testimonies, or periodic testimonies, there’s a control system around it. And so I think we have to be careful, because if you look at other countries around the world that do not have that, it never works out as well as one that is.”
When asked whether or not Trump should have a say in what the Fed does, Moynihan said the President jawboning about interest rates is “not a new concept” but the Fed should continue to stay focused on its job deciding the appropriate level of interest rates.
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Stocks near session lows as yields rise
All three of the major averages hovered near session lows just before 12:30 p.m. ET.
The Dow Jones Industrial Average (^DJI) slid about 0.6%, or more than 250 points, while the S&P 500 (^GSPC) fell about 0.4% and the tech-heavy Nasdaq Composite (^IXIC) slipped about 0.3%.
The move lower came in stocks as Treasury yields were once again on the rise. The 10-year Treasury yield (^TNX) added about 12 basis points to hit nearly 4.42%. Meanwhile, the 2-year Treasury moved up 10 basis points to 4.35%, its highest level since late July.
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Snap stock slides after report says Trump will halt TikTok ban
Snap (SNAP) stock fell about 4% on Tuesday after a report from the Washington Post stated that President-elect Donald Trump is “expected to try to halt a potential U.S. ban of TikTok next year.”
The Post cited anonymous sources in its report but Trump himself did make claims about “saving TikTok” during his time on the campaign trail.
Snap, a direct competitor to TikTok in the social media space, had been seen as a beneficiary of a potential ban of TikTok in the US.
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Inflation expectations hit lowest level in 4 years in October: NY Fed survey
Consumers’ inflation expectations continue to move lower.
A new October survey from the Federal Reserve Bank of New York showed consumers expect inflation at 2.9% in one year, down from the 3% seen a year prior. This marked the lowest one-year outlook in four years and falls in line with a recent survey from the University of Michigan.
The latest consumer sentiment survey from the University of Michigan revealed that consumers expect inflation to sit at 2.6% in a year, a decrease from last month’s expectation of 2.7%. November’s reading is the lowest since December 2020 and within the 2.3% to 3% range seen in the two years before the pandemic.
Read more about Federal Reserve Chair Jerome Powell is viewing inflation expectations here.
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BlackRock’s Rick Rieder: ‘I don’t love the multiple’ on stocks
The S&P 500 (^GSPC) is already trading at 22.2 times 2025 earnings estimates, research from FactSet on Friday showed. This is above the five-year average of 19.6 and the 20-year average of 15.8.
On Tuesday, BlackRock chief investment officer of global fixed income Rick Rieder said at Yahoo Finance Invest that he doesn’t “love” this high multiple. Importantly, though, Rieder said that he’s still “long equities.”
Rieder cited the continued demand for stocks via 401(k) flows and company buybacks creating a bullish technical backdrop for equities.
“You shrink the denominator because [companies are] buying back a bunch of their stock and there’s no sellers,” Rieder said.
DataTrek co-founder Nicholas Colas also addressed why high valuations might not be a reason to stay out of stocks in a note to clients on Tuesday.
“As uncomfortable as owning a 22x S&P 500 might be, let’s remember that math is not a useful investment edge,” Colas wrote. “This is especially true over 1-2 years if no catalyst appears to hurt investor confidence. The bottom line here is that if 1) the US economy continues to grow and 2) the incoming administration proves as business friendly as markets hope, then valuations could easily expand from here.”
He added: “We would not be at all surprised to see the S&P 500 trade for 25x forward earnings sometime in 2025.”
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Shopify stock soars after earnings beat
Shopify’s (SHOP) stock jumped more than 23% after the provider of e-commerce tools posted better-than-expected quarterly results.
The Canadian company reported third quarter revenue of $2.16 billion, topping analyst estimates of $2.11 billion. Its quarterly earnings per share of $0.64 also came in better than the $0.27 that analysts had projected.
Shopify’s strength in the third quarter “looks durable,” Citi analyst Tyler Radke wrote in a note, citing the company’s boosted guidance for the current quarter. The company now sees revenue growth in a range of mid-to-high 20% gains, up from a prior guidance of low-to-mid 20growth.
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Netflix ad tier hits 70 million monthly active users
Netflix (NFLX) said Tuesday that its ad tier, now two years old, has reached 70 million global monthly active users. That’s a significant jump from the 40 million users the streaming company revealed at its second Upfront presentation in May.
The ad plan now accounts for over 50% of all Netflix sign-ups in markets where it’s offered.
“There has been continuous momentum over the last two years, but we’re just getting started and can’t wait to see what’s to come,” Amy Reinhard, president of advertising at Netflix, said in a blog post.
She added that recent shows, like “Nobody Wants This,” “The Diplomat,” and “Monsters: The Erik and Lyle Menendez Story,” along with live streaming events like the upcoming Jake Paul vs. Mike Tyson fight, have been “driving even more fandom and conversation — which our advertisers love.”
To note: Monthly active users, otherwise known as “MAUs”, are not the same as paying subscribers. Netflix has yet to reveal actual subscriber figures for the ad tier or how much revenue it’s generated so far. MAUs can include multiple people using the same account.
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Treasury yields pick up steam Tuesday morning
Stocks largely took a breather at the open after a significant rally over the last week. The Dow Jones Industrial Average (^DJI) rose about 0.2%, while the S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) traded just below the flat line.
The tepid approach in equities came as Treasury yields ticked higher. The 10-year Treasury yield (^TNX) added about 8 basis points to trade around 4.39%.
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Apollo’s Rowan says regulatory environment will be ‘more constructive’ under Trump
In the past week, the market has made a significant bet that President-elect Donald Trump will bring a more friendly regulatory environment to American corporates.
On Tuesday, Apollo Global Management CEO Marc Rowan said at the Yahoo Finance Invest event that the market appears to have that right. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
“Certainly the regulatory tone over the past four years has been difficult,” Rowan said. “I expect that the tone will be much more constructive to allow financial systems, financial markets, corporate markets to evolve to where the world is, not where the world was.”
Yahoo Finance Invest is streaming live all day, featuring big-name guests such as Bank of America CEO Brian Moynihan and Federal Reserve Bank of Minneapolis president Neel Kashkari. Tune in here.
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The FOMO market is back
The stock market is ripping higher, and the memes of people throwing Benjamin Graham’s “Intelligent Investor” in the trash are back all over X, formerly Twitter.
The Intelligent Investor meme has become a calling card for moments when rallies in certain trades become so massive that it’s hard to use any traditional investing lesson to explain them. Think meme stock mania, or the boatload of other post-pandemic trades that have since fizzled.
Early on Tuesday, bitcoin (BTC-USD) rose to almost $90,000 per coin for the first time ever. The digital currency’s surge on Monday dragged crypto-related stocks upward with it. Shares of Coinbase (COIN), which offers digital-asset trading on its exchange, are now up more than 70% in the past five days.
And it’s not just crypto either. Tesla (TSLA) stock is up over 50% in the past five sessions. Artificial intelligence names like Palantir (PLTR) are soaring too, with that stock up nearly 50% in the past five days.
Many of these surging trades are part of the so-called Trump trade, in which areas of the market that could benefit from the president’s expected policies are rallying.
But the massive moves indicate there’s more than a fundamental story at play here: They’re a clear sign that the fear of missing out (FOMO) is alive and well in the 2024 stock market rally.
Read more from the Yahoo Finance Morning Brief newsletter here.
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Good morning. Here’s what’s happening today.
Here are some of the big market and economic themes on Tuesday morning. Bitcoin (BTC-USD) is closing in on $90,000, fueled by investor optimism around President-elect Donald Trump’s pro-crypto policies. Shopify (SHOP) saw a surge after exceeding quarterly revenue estimates and raising its holiday sales forecast. Meanwhile, Home Depot (HD) raised its annual outlook, citing strong demand from contractors despite the broader pullback in consumer spending.
Economic data: New York Fed one-year inflation expectations, (October)
Earnings: Cava (CAVA), Hertz (HTZ), Home Depot (HD), Instacart (CART), Novavax (NVAX), Occidental Petroleum (OXY), On Holding (ONON), Plug (PLUG), Shopify (SHOP), SoundHound (SOUN), Spotify (SPOT)
Here are some of the biggest stories you may have missed overnight and early this morning:
Bitcoin briefly rises to near $90,000 as traders bet on Trump
Shopify stock jumps after AI tools boost customer growth
Home Depot forecasts smaller drop in sales amid hurricane lift
JPMorgan: If 10-year yield hits 5%, Trump rally may sputter
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Rent prices fell 0.6% in October, new data shows
Rent prices ticked down 0.6% in October from the prior month as the supply of apartments coming onto the market outpaced demand.
The median asking rent fell to $1,619 in October, new data from Redfin showed Tuesday. That marked a drop from September but a 0.2% increase from a year before.
This data comes one day before the government’s Consumer Price Index (CPI) report for October. Shelter costs have been one of the biggest contributors to inflation over the last year, with shelter and food costs accounting for 75% of the increase in the CPI in September.
