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The roaring rally in US stocks lost steam on Tuesday, with futures hitting pause as investors assessed whether buying has been overdone and what Donald Trump’s cabinet picks mean for policy.
Dow Jones Industrial Average futures (YM=F) nudged 0.1% lower, while S&P 500 futures (ES=F) shed roughly 0.2% after both gauges closed above key milestones. Contracts on the tech-heavy Nasdaq 100 (NQ=F) edged down 0.1%.
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 lifted 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 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 $87,240, up about 6%.
Other “Trump trades” also lost some fizz. Tesla’s (TSLA) stock slipped into the red in premarket after soaring thanks to CEO Elon Musk’s alliance with the incoming president. Crypto-linked stocks Coinbase (COIN) and Robinhood (HOOD) struggled for gains.
Focus is starting to turn to Wednesday’s report on the consumer price index for October, watched for signs that inflation is cooling as the Federal Reserve desires. Retail sales data on Thursday is another key input for the Fed’s policy decision at its December meeting — its last before the Trump administration takes office.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
LIVE 2 updates
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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 outpaces demand.
The median asking rent fell to $1,619 in October, new data from Redfin showed Tuesday, a drop from last month but a slight 0.2% increase from a year ago.
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.
Softening in rent increases also comes as new multifamily housing units are being completed at the fastest pace on record since 1994, which has pushed lower in metros where supply surpasses demand, Redfin’s senior economist Sheharyar Bokhari explained.
For example, Tampa and Jacksonville have seen the largest rent declines following a pandemic-driven surge in demand, which led to a construction boom across several Sun Belt states.
In recent months, however, there’s been a shift in construction patterns with a slowdown in multifamily projects.
“Construction is slowing, but we will continue to see a wave of new apartment buildings coming onto the market in coming months, which is good news for renters looking for an affordable rental in 2025,” Bokhari said.
Overall, rents have largely remained flat over the past two years. But a widespread cooldown in rents hasn’t yet passed all the way through to shelter inflation readings, which have stayed stubbornly sticky for the past two years, due to how the BLS collects rent data.
In a press conference last week, Fed Chair Jerome Powell said rents for newly signed leases “are experiencing very low inflation.”
“And what’s happening is older…leases that are turning over are taking several years to catch up to where market leases are,” Powell added. “So that’s just a catch-up problem. It’s not really reflecting current inflationary pressures, it’s reflecting past inflationary pressures.”
