U.S. Stocks Move Moderately Lower After Seeing Early Strength

Stocks experienced a downturn on Tuesday after initially showing promise, continuing the decline seen on Monday. The major indices, including the Nasdaq and the S&P 500, retreated further from the record highs set last Friday.

Throughout the latter part of the trading day, the primary averages hit new session lows. By the close, the Dow Jones Industrial Average had decreased by 154.10 points, or 0.4%, closing at 44,247.83. The Nasdaq Composite dropped 49.45 points, or 0.3%, to 19,687.24, while the S&P 500 fell 17.94 points, or 0.3%, ending at 6,034.91.

The slide in Wall Street's performance occurred as investors keenly anticipated the Labor Department's upcoming report on consumer price inflation, set to release on Wednesday. Investor sentiment appeared to be cautious, as expressed by Danni Hewson, head of financial analysis at AJ Bell, noting, "The anticipated 'Santa rally' has not materialized today as markets remain preoccupied with tomorrow's inflation data."

Forecasts for the report suggest a fifth consecutive month of a 0.2% rise in consumer prices for November, with the annual growth rate anticipated to inch up to 2.7% from 2.6% in the previous month. Excluding food and energy, core consumer prices are projected to rise by 0.3% for the fourth consecutive month, with the annual growth rate holding steady at 3.3%.

Although the Federal Reserve is largely expected to reduce rates by another 25 basis points next week, this data could influence projections for subsequent rate cuts. According to the CME Group's FedWatch Tool, there is an 86.1% probability that the Fed will lower rates by a quarter-point next week, but a 69.1% chance they will maintain rates in late January.

In sector-related news, computer hardware stocks faced significant losses, with the NYSE Arca Computer Hardware Index plummeting 3.8% after reaching a near five-month high at the previous close. Semiconductor stocks also fell, evidenced by a 2.5% decline in the Philadelphia Semiconductor Index. Housing stocks followed suit, as the Philadelphia Housing Sector Index dropped 2.1%. Toll Brothers (TOL) notably drove this sector down, reporting fourth-quarter earnings that exceeded estimates but with a lower-than-expected gross margin in homebuilding.

Conversely, airline stocks performed strongly, with the NYSE Arca Airline Index rising by 1.7%. Alaska Air Group (ALK) soared by 13.2% after an optimistic fourth-quarter profit forecast revision.

Globally, markets in the Asia-Pacific region had a mixed performance on Tuesday. Japan's Nikkei 225 Index increased by 0.5%, while Hong Kong's Hang Seng Index decreased by 0.5%. In Europe, stocks predominantly saw a downturn. The French CAC 40 Index declined by 1.1%, the U.K.'s FTSE 100 Index by 0.9%, and Germany's DAX Index edged down by 0.1%.

The bond market saw treasury yields continue their upward trend from the previous session, with the yield on the benchmark ten-year note rising by 2.2 basis points to 4.221%.

The material has been provided by InstaForex Company - www.instaforex.com
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