US benchmark equity indexes experienced a downward trend intraday as the Federal Reserve commenced its two-day monetary policy meeting while investors evaluated the latest economic performance indicators. The Dow Jones Industrial Average decreased by 0.7% to 43,406.7, the S&P 500 fell 0.4% to 6,049.5, and the Nasdaq Composite lost 0.3%, settling at 20,119.5.
Among various sectors, energy faced the most notable declines, with only consumer discretionary and real estate showing positive movement. The financial markets appear to anticipate that the Federal Open Market Committee will implement a quarter-percentage-point reduction in its benchmark lending rate on Wednesday, as indicated by the CME FedWatch tool.
This move would represent the second consecutive 25-basis-point decrease following a more substantial 50-basis-point reduction in September. The upcoming rate decision will coincide with the updated economic projections from the FOMC. Fed Chair Jerome Powell is expected to emphasize the potential for a slower pace of easing in the future, alongside uncertainty surrounding the neutral rate and the data-dependence of policy direction, as noted in a communication from Macquarie to its clients. Meanwhile, the US 10-year yield saw a minimal decline of one basis point, reaching 4.39%, while the two-year rate remained stable at 4.25%.
In terms of economic news, US retail sales increased at a faster-than-expected rate in the previous month, bolstered by higher spending on automobiles, as reported by the Census Bureau. Homebuilder confidence in the US remained unchanged in December, with elevated prices and mortgage rates countering a renewed optimism regarding an improved regulatory landscape for the coming year, based on data from the National Association of Home Builders in conjunction with Wells Fargo. 'While builders express concerns regarding high interest rates, increased construction costs, and a lack of buildable lots serving as headwinds, they do anticipate future regulatory improvements following the election,' commented NAHB Chairman Carl Harris. In commodity news, West Texas Intermediate crude oil dropped by 1.2% to $69.83 a barrel intraday amid 'renewed concerns' regarding demand in China, as noted by D.A.
Davidson in a client update. In corporate developments, Amentum ($AMTM) shares plummeted 11%, marking the worst performance on the S&P 500 after the company disclosed a year-over-year decline in its fiscal fourth-quarter pro forma non-GAAP net income and revenue late Monday. In contrast, Pfizer ($PFE) emerged as the top performer on the S&P 500 intraday Tuesday, rising 4.6% following projections of higher earnings for 2025 along with revenue estimates aligning with the current year's likely outcome as the pharmaceutical leader seeks to maintain 'disciplined execution' and ongoing cost reductions. Nike's ($NKE) stock is forecasted to recover gradually as signs indicate that the sportswear titan's turnaround efforts under new leadership are beginning to yield results, according to Truist Securities' communication.
Shares of Nike rose 1.7%, making it the leading gainer on the Dow. Gold prices saw a slight decrease of 0.3%, settling at $2,661.60 per troy ounce, while silver dropped 0.5% to $30.90 per ounce..