Stock Market Today: Dow, S&P 500, Nasdaq Set to Open Up; Nvidia, Tesla, Netflix, Palantir, More Movers – Barron’s
The Dow got hit hard today, and so did most other parts of the market as traders prep for earnings from Nvidia and big box retailers and brace for the release of government data.
The Dow fell 557 points, or 1.2%, while the S&P 500 fell 0.9% and the Nasdaq Composite was down 0.8%. Crypto was down too, with Bitcoin losing 2.6%, the loudest evidence of the market’s pessimism on risky investments.
There was no clear trigger for the selling. Data showed construction spending decreased 1.6% compared with a year ago. While that’s negative for U.S. economic growth and in turn the risk-on trade, it would hardly elicit such a selloff.
Comments from Fed Vice Chair Philip Jefferson weren’t out of the ordinary this morning. Minneapolis Fed President Neel Kashkari didn’t add to the conversation on rate cuts.
Instead, there’s a prevalence of buyers’ exhaustion, a continuity of the trade from last week.
“I think the market had gotten spoiled in October; it seemed like every couple days or every week, there was some new partnership or new deal done among the AI players, which led to a lot of fair value increases,” wrote Dave Sekera, chief U.S. market strategist at Morningstar, in a note.
Sekera described the back-to-back losses in the Dow and the S&P 500 last week as “buyer fatigue.” The Dow and S&P 500 marked their third-straight down days. The S&P 500’s price/earnings ratio, which indicates how much investors will pay for each dollar of company profit, is near its peak multiple of 22.48.
Investors may also be recalibrating their positions because interest rates are likely to end up higher than expected in 2025. “It appears all voting Regional Presidents excluding NY Fed President Williams would oppose a December cut,” wrote Wells Fargo. The Fed’s December meeting decision is basically a coin toss, the bank added.
That could have pushed the smaller stocks over the edge. iShares Core S&P Small-Cap ETF was down 2.2% today and has now lost 0.8% for the year. Smaller companies are more reliant on external funding, and higher rates hurt them.
In the bond market, the 10-year Treasury yield declined 0.015 percentage point to 4.132% today. That is to say there was little buying of longer-dated Treasuries, a safe asset.
“10-year yields are comfortably in the prevailing range as investors await Thursday’s employment report – it might be stale data, but it is still payrolls,” wrote BMO’s rate strategist Ian Lyngen.
Consumer staples and gold, other popular safe assets, saw selling. Bottom line: The market losses went deep today.
