S&P 500 and Nasdaq snap 5-day win streak as Fed indicates policy must stay restrictive: Live

U.S. stocks ended Tuesday’s trading session in the red.

The Dow Jones Industrial Average fell 62.75 points, or 0.18%.

The S&P 500 and Nasdaq Composite declined 0.20% and 0.59%, respectively.

— Hakyung Kim

The latest Federal Reserve meeting minutes indicate that the central bank has earned back some respect from the market it lost earlier in the inflation fight, according to Jamie Cox, managing partner for Harris Financial Group.

“If nothing else, the Fed has regained the respect of markets, which it had lost in spectacular fashion by misreading inflation in 2021,” Cox said.

“The Fed has markets right where it wants it to keep financial conditions restrictive without having to raise rates further,” he also said. “Forward guidance, Fed minutes, and all other forms of the Federal Reserve communication strategy now has the credibility to manage market expectations again.”

— Alex Harring

A sign is emerging for investors to raise exposure to bonds, and Ned Davis Research is answering the call.

The firm said on Tuesday that it’s raising its bond exposure to 105% of benchmark duration from 100%. NDR cited improvement in its Bond Enhancement Model, noting that on Friday it rose and triggered a new buy signal for fixed-income issues.

“If the FOMC moves to a balanced policy outlook in December, bonds should continue to rally,” said chief global macro strategist Joseph Kalish.

The firm thinks the central bank is done hiking rates and July’s raise was the final one in the cycle. “In general, it has not been worth owning bonds when the Fed has a tightening bias until the last rate hike is in,” he added.

Indeed, the Federal Reserve’s latest meeting minutes show no indication of possible rate cuts, but do show policymakers believe they can “proceed carefully” and make decisions based “on the totality of incoming information and its implications for the economic outlook as well as the balance of risks.”

-Darla Mercado, Jeff Cox

Oil prices were largely unchanged Tuesday after rallying the past two sessions as traders await a meeting of the Organization of Petroleum Exporting Countries later this week.

The Brent crude contract for January rose 13 cents, or .16%, to settle at $82.45 a barrel Tuesday, while the West Texas Intermediate contract for January fell 6 cents, or .08%, to settle at $77.77 a barrel.

OPEC and its allies, OPEC+, will meet Sunday amid speculation that the group could implement deeper production cuts as oil prices have dropped significantly since September amid demand concerns.

A senior official at the International Energy Agency told Reuters Tuesday that global oil market will see a slight supply surplus in 2024 even if OPEC+ countries extend their current production cuts into next year.

— Spencer Kimball

Despite the market optimistically pricing in a rate cut from the Federal Reserve, the most recent Fed minutes underscore the central bank’s ongoing concerns on inflation — and no intentions of lowering rates so far.

“The disconnect perhaps between a market that has made up its mind that Fed implicitly– if not explicitly– declared a “dovish pivot” at its last meeting, and that a more distinct slowdown in economic growth would demand interest rate cuts by the summer of 2024,” said Quincy Krosby, chief global strategist at LPL Financial.

— Hakyung Kim

The Federal Reserve released the minutes from its Oct. 31-Nov. 1, which showed the central bank didn’t give an indication of possible rate hikes coming.

“In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be kept sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time,” the minutes stated.

— Jeff Cox

Wall Street is keeping a close eye on chipmaker Nvidia’s quarter earnings after Tuesday’s market close.

According to Bespoke Investment, investors could see a large bounce in share prices during the following trading session on Wednesday. Nvidia has historically average an absolute one-day move of 8.4% following its 87 quarterly earnings reports since 2001, the firm said.

— Hakyung Kim

The SPDR S&P Insurance ETF (KIE) hit its highest intraday level on record on Tuesday, dating back to 2005.

The ETF rose about 0.8% on Tuesday, extending its November gains to more than 4%. The fund is on track for its best month since June.

If the fund finishes the day above $44.30 per share, it will have its highest close on record.

Shares of Travelers and Progressive both rose more than 1%, boosting the KIE.

— Jesse Pound, Nick Wells

Here are some of the names moving in midday trading:

Amazon — Shares slid about 2% after CNBC’s David Faber reported Jeff Bezos is expected to be “aggressive” in selling more shares of Amazon. Burlington Stores — The retail stock jumped 20.6% after Burlington raised the lower end of its full-year earnings guidance. The company also said it is expecting total sales growth of 11% in 2024, which is higher analysts expected. Medtronic — The medical equipment stock popped 4.2% after the medical equipment company reported adjusted earnings per share of $1.25 on revenues of $7.98 billion. That topped the $1.18 on revenues of $7.92 billion expected from analysts polled by LSEG.

To see more stocks making midday moves, read the full story here.

The S&P 500’s November rally has pushed it up more than 10% from its October lows, according to LPL Financial.

Chief technical strategist Adam Turnquist is particularly optimistic on the more diverse market rally.

“Participation in the current recovery has improved significantly over the last few weeks, suggesting this is not just a ‘Magnificent Seven’ story,” Turnquist said. As of Monday’s close, 55% of the stocks in the broad market index closed above their 200-day moving average, which was more than double from the end of October, he added.

“Cyclical sectors are exhibiting the broadest breadth readings, including financials, which are finally participating in the rally,” said Turnquist. “Overall, we view the recent expansion in breadth as a constructive sign for the health and sustainability of the current recovery.”

— Hakyung Kim

The technology sector was the biggest decliner in the S&P 500 during Tuesday’s trading session, declining 1.1% against the broad market index’s 0.3% decline. This marked the tech sector’s worst day since Oct. 26.

Semiconductor stocks fell broadly Tuesday. On Semiconductor, Qualcomm, Monolithic Power Systems and Intel all lost 2.5% and more.

— Hakyung Kim

Shares of legacy automaker Ford dipped 2.2% on Tuesday after the company said it would scale back plans to invest $3.5 billion in a Michigan battery plant for electric vehicles.

The company said it would slash production capacity down by 43% to 20 gigawatt hours annually, although Ford declined to specify the dollar amount now being invested. EVs have seen softer consumer demand in recent months, and the latest move from Ford follows a similar announcement in October to delay $12 billion worth of EV investment. Shares of peer automaker General Motors also pulled back 2.2%.

Jeff Bezos is expected to be “aggressive” in selling more shares of Amazon on Tuesday, sources told CNBC’s David Faber.

Shares of Amazon are down 2.5%.

Bezos may sell as many as 8 to 10 million shares, which would amount to more than $1 billion worth of stock, the sources told Faber. This comes a week after the former CEO sold 1.67 million shares last week, according to financial filings. 

The full story can be found here.

October’s weaker-than-expected housing data indicates home buyers are feeling pressured by high rates. Existing home sales fell to their lowest level since August 2010 and declined more than 14% year-over-year.

“The confluence of high prices, high interest rates, and stubbornly low inventory are flash frying home buying now,” said Jamie Cox, managing partner for Harris Financial Group.

He added that “if rates fall next year, housing will snap back.” Fed funds futures pricing suggests that the Federal Reserve will hold rates steady at its upcoming December meeting.

— Hakyung Kim

Oil prices fell slightly Tuesday as the International Energy Agency forecasts surplus supply in 20204 even in the Organization of Petroleum Exporting Countries extends current production cuts.

The global benchmark Brent crude contract for January dropped 32 cents, or .39%, to $82 per barrel. while the West Texas Intermediate contract for January fell 42 cents, or .54%, to $77.41 a barrel.

Traders are bracing for a pivotal OPEC Sunday in which the oil producers are expected to discuss extending or deepening production cuts.

A senior official at the IEA told Reuters that there will be a slight surplus of oil in 2024 even if OPEC and its allies extend production cuts into next year.

— Spencer Kimball

Oppenheimer thinks C3.ai has positioned itself to provide “real-world” customer benefits and accelerate revenue.

The firm upgrades the artificial intelligence software stock to outperform from market perform in a Tuesday note, and raised its price target to $40. Oppenheimer’s forecast implies nearly 43% upside from Monday’s $28.04 close.

“The ‘AI’ theme is real and durable, with C3.ai well-positioned as one of the few pure plays helping customers drive new revenue sources/major productivity improvements,” analyst Timothy Horan said.” [C3.ai] should accelerate growth into ’25E.”

C3.ai stock added 3.8% in premarket trading.

— Brian Evans

American companies are buying up their own stock for the holidays, according to Bank of America.

Strategist Jill Carey Hall said in a note to clients on Tuesday that last week saw the second-highest level of corporate buybacks since 2010, according to Bank of America’s data. The purchases comes at the tail end of a relatively soft year for buybacks.

“Corporate client buybacks accelerated the past two weeks and are tracking above seasonal levels for a second week in a row. YTD, corp. client buybacks as a percentage of S&P 500 mkt. cap (0.19%) are below ’22 highs (0.21%) at this time,” the note said.

— Jesse Pound

U.S. stocks started Tuesday’s trading session in the red.

The Dow Jones Industrial Average fell 55 points, or 0.16%.

The S&P 500 and Nasdaq Composite declined 0.25% and 0.53%, respectively.

— Hakyung Kim

The dollar index hit a low last seen in late August.

The index, which measures the U.S. greenback against a basket of foreign currencies, notched a session low of 103.18. That marked the cheapest level for the index since Aug. 31, when it reached 103.009.

— Alex Harring, Gina Francolla

Cloud stocks DigitalOcean and Cloudflare rose in Tuesday premarket trading following upgrades from Oppenheimer.

Analyst Timothy Horan upgraded DigitalOcean to outperform from perform, citing strong AI demand that’s set to bolster growth for the company. Notably, Horan, who anticipates rate cuts in 2024, expects easing monetary policy will support high growth names.

“We think growth is set to accelerate and are increasing outer-year estimates driven by several factors,” Horan wrote on Tuesday. “AI demand is clearly strong and enterprise adoption is set to surge as we move past the network grooming phase of cloud services.

His $37 price target represents roughly 30% upside for the stock. The stock popped nearly 3% in premarket trading.

Separately, Horan upgraded shares of Cloudflare to outperform from perform, citing strong demand and “interesting new user cases” around its new Workers platform that allows customers to run AI models.

The $85 price target suggests Cloudflare can rise 16%. The stock rose roughly 1% in premarket trading.

— Sarah Min