On Tuesday, U.S. equity markets ended with mixed results: the S&P 500 declined by 0.24%, the Dow Jones Industrial Average dropped 0.62%, while the Nasdaq 100 edged up 0.26%. Futures for December S&P 500 contracts fell 0.25%, whereas Nasdaq futures rose 0.25%. The broader market faced downward pressure as recent economic data signaled a slowdown in activity.
The S&P 500 reached a three-week low, influenced by weaker-than-expected figures. November’s unemployment rate climbed to 4.6%, its highest level in four years. Retail sales for October showed no monthly growth, missing forecasts, although sales excluding automobiles rose 0.4%, surpassing expectations. Manufacturing activity, as measured by the S&P U.S. Manufacturing PMI, dipped to 51.8, a five-month low and below the anticipated 52.1.
Energy stocks were particularly weak, dragging down major indices after WTI crude oil prices plunged over 2% to a 4.75-year low. Phillips 66 (PSX) fell more than 6%, Baker Hughes (BKR) dropped over 3%, and several other energy firms including APA Corp (APA), Marathon Petroleum (MPC), and Halliburton (HAL) declined between 3% and 5%. Exxon Mobil (XOM), Chevron (CVX), and Devon Energy (DVN) each lost over 2%.
Despite these headwinds, technology shares provided support. The so-called Magnificent Seven tech giants helped lift the Nasdaq 100 from its lows. Tesla (TSLA) gained over 3%, Meta Platforms (META) rose more than 1%, and Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN) posted modest gains. Alphabet (GOOGL), however, declined 0.54%.
Labor market data presented a mixed picture. November nonfarm payrolls increased by 64,000, exceeding the expected 50,000, but October’s figures were revised down to a loss of 105,000 jobs. Average hourly earnings rose just 0.1% month-over-month and 3.5% year-over-year—the smallest annual gain in 4.5 years—suggesting easing wage pressures.
Treasury yields responded to the data, with the 10-year note yield falling 2.7 basis points to 4.145%. The decline reflected dovish interpretations of inflation and employment trends. Breakeven inflation expectations also dipped to a two-week low of 2.231%, reinforcing the view that inflation may be cooling.
However, some factors limited bond gains. Retail sales ex-autos outperformed, and hawkish remarks from Atlanta Fed President Raphael Bostic weighed on sentiment. Bostic stated that price stability remains a top concern and predicted inflation would stay above 2.5% through 2026. His comments contrasted with market expectations of potential rate cuts.
Internationally, European and Asian markets closed lower. The Euro Stoxx 50 declined 0.60%, China’s Shanghai Composite fell 1.11%, and Japan’s Nikkei 225 dropped 1.56%. In Europe, manufacturing data varied: the Eurozone PMI unexpectedly fell to 49.2, indicating contraction, while the UK’s rose to 51.2, the strongest expansion in 15 months. Germany’s ZEW economic sentiment index improved to 45.8, beating forecasts.
Market participants are currently pricing in a 24% probability of a 25-basis-point rate cut at the Federal Reserve’s January 27–28 meeting. Upcoming data, including CPI and consumer sentiment readings, will likely influence future monetary policy decisions.
— news from Nasdaq