U.S. stocks softened on Tuesday, closing down as investors began the holiday-shortened week by taking profits in the wake of a sustained rally amid signs of weakening global demand.
Federal Reserve Chairman Jerome Powell’s congressional testimony Wednesday looms as a potential market mover. All three major U.S. equity indexes ended the session in the red but off session lows, with oil super-majors Exxon Mobil Corp and Chevron Corp weighing on the S&P 500 and the Dow.
The broad sell-off comes on the heels of the Nasdaq’s longest weekly winning streak since March 2019, and the S&P 500’s longest since November 2021. As of Friday’s close, the benchmark S&P 500 had advanced 20% in the last twelve months, and over 14% so far this year.
“The market is trying to test whether these recent gains are going to stick,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “The market runs in cycles and the most recent rally has surprised a lot of people.” Investors now look to Powell’s two-day testimony before Congress, starting with the U.S. House Financial Services Committee on Wednesday, which will be scrutinized for clues regarding how long the central bank will keep its restrictive policy in place.
“The Fed hasn’t given these hikes much time to have a real impact on the economy,” Pavlik added. “I don’t know what the Fed sees that the rest of us don’t see,” Pavlik said. “Inflation is not running as rampant as it was. We’ve seen it at the grocery stores and we’ve seen it at the pump.”
Concerns over slowing global demand loomed larger after China cut its lending benchmarks to jump start sluggish demand, which offset a 21.7% surge in housing starts, the largest monthly jump in thirty years. According to preliminary data, the S&P 500 lost 20.79 points, or 0.47%, to end at 4,388.80 points, while the Nasdaq Composite lost 22.28 points, or 0.16%, to 13,667.29. The Dow Jones Industrial Average fell 242.15 points, or 0.71%, to 34,056.97.
Electric vehicle rivals Rivian Automotive Inc and Tesla Inc advanced after Rivian announced it had agreed to adopt Tesla’s charging standard. PayPal Holdings rose after KKR & Co agreed to purchase up to 40 billion euros ($43.71 billion) worth of the payments firm’s “buy now, pay later” loans in Europe.
Nike slipped after Morgan Stanley said it expects margin pressures arising from the company’s inventory glut. U.S.-listed shares of Alibaba Group slid after the e-commerce company announced Daniel Zhang would step down from his roles as CEO and chairman to focus on the company’s cloud division.
Adobe Inc fell following a report that European antitrust regulators were preparing to investigate the firm’s deal to buy cloud-based designer platform Figma. Dice Therapeutics Inc surged after Eli Lilly and Co said it would buy the company in an all-cash deal for about $2.4 billion.
Package delivery giant Fedex Corp is expected to report quarterly results shortly.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)