The S&P 500 and the Nasdaq Composite experienced a decline on Tuesday for the first time since last week's presidential election, as markets were cautious ahead of the official consumer inflation data for October. The S&P 500 dropped 0.3% to 5,984, while the technology-heavy Nasdaq lost 0.1% to 19,281.4.
The Dow Jones Industrial Average saw a steep drop of 0.9%, closing at 43,911. Donald Trump’s victory over Kamala Harris in the recent poll initially propelled stock markets upward, with all three benchmark equity indexes achieving record high closures on Monday. Among the sectors, materials faced the most significant decline, while communication services, technology, and consumer staples showed gains.
Electric vehicle manufacturer Tesla's shares slid 6.2%, marking one of the steepest drops on the Nasdaq. Post-election, Tesla has gained over $300 billion in market capitalization, driven by expectations of a favorable Trump administration, as noted by Deutsche Bank. Elon Musk, Tesla’s CEO, was a prominent supporter of Trump during the 2024 election campaign. In fixed income markets, the US 10-year yield increased by 12 basis points to 4.43%, while the two-year rate advanced by 8.8 basis points to 4.34%. Richmond Fed President Tom Barkin commented that the US economy is currently in a strong position, with interest rates stabilizing after recent peaks.
This allows policymakers the flexibility to respond effectively to future economic developments. Minneapolis Fed President Neel Kashkari mentioned that the US monetary policy remains 'modestly restrictive', indicating that short-term borrowing costs are aiding in cooling inflation and slowing economic growth, albeit at a gradual pace, as reported by Reuters. Recently, the Federal Open Market Committee of the central bank lowered its benchmark lending rate by 25 basis points, following a 50-basis-point cut in September. In October, US consumers’ inflation expectations eased, coupled with a decline in labor market concerns, according to a survey conducted by the New York Fed.
Preliminary data is anticipated to reveal that consumer inflation rose 0.2% month-over-month and 2.6% year-over-year last month, as per a consensus compiled by Bloomberg. Furthermore, official producer prices data for October is set to be released on Thursday. A report by the National Federation of Independent Business noted a rise in small business optimism in the US for October, although the uncertainty index remains at a record high.
This situation is expected to improve now that the elections have concluded. Mosaic shares tumbled 7.7%, experiencing the steepest decline on the S&P 500, after reporting third-quarter financial results that fell short of expectations. On the Dow and Nasdaq, Amgen was the worst performer, declining 7.1%, and was also one of the weakest on the S&P 500. Conversely, Tyson Foods exceeded both top- and bottom-line expectations for its fiscal fourth quarter, despite projecting a slight slowdown in sales for the upcoming year amidst uncertainties in its beef sector.
The company’s shares rose by 6.6%, making it the top gainer on the S&P 500. Live Nation Entertainment also saw a gain of 4.7%, positioning it among the top performers on the S&P 500. The company disclosed mixed results for the third quarter but highlighted strong demand for its Ticketmaster sales segment in the current quarter and into 2025. West Texas Intermediate crude oil remained relatively stable at $68.01 a barrel on Tuesday.
The Organization of the Petroleum Exporting Countries (OPEC) has reduced its global oil demand projections for 2024 and 2025 for the fourth consecutive month while raising its forecasts for global economic growth. In the commodities market, gold decreased by 0.5%, settling at $2,604.50 per troy ounce, while silver increased by 0.8%, reaching $30.87 per ounce..