On Tuesday, US benchmark equity indexes experienced a downturn as the Federal Reserve commenced its two-day monetary policy meeting and traders assessed the latest economic data. The Dow Jones Industrial Average witnessed a decrease of 0.6%, settling at 43,449.9, while the S&P 500 fell by 0.4% to 6,050.6.
The Nasdaq Composite also saw a decline, dropping 0.3% to 20,109.1, retreating from the previous day's record close. Except for consumer discretionary, all sectors faced losses, predominantly driven by industrials. Market expectations indicate that the central bank's Federal Open Market Committee is likely to implement a 25-basis-point reduction in its benchmark lending rate on Wednesday, per the CME FedWatch tool.
This would signify a second consecutive decrease of 25 basis points following a 50-basis-point cut in September. This rate decision comes alongside the FOMC's updated economic projections. Fed Chair Jerome Powell is anticipated to emphasize a slower pace of easing moving forward, address uncertainties related to the neutral rate, and the data-dependence of the policy outlook, as noted in a report from Macquarie shared with clients. Meanwhile, US 10- and two-year yields remained relatively unchanged at 4.40% and 4.25%, respectively.
In other economic news, US retail sales saw a faster-than-expected rise last month, primarily attributed to increased spending on automobiles, data revealed by the Census Bureau. However, US industrial production declined for the third consecutive month in November, despite the manufacturing sector returning to growth, according to data from the Fed.
A report from Desjardins remarked, "Apart from the good news on the automotive front, November's retail sales and industrial production numbers were nothing to write home about." Regarding housing, US homebuilder confidence remained stable in December, as high prices and elevated mortgage rates tempered renewed optimism surrounding an enhanced regulatory environment anticipated for the next year, according to data from the National Association of Home Builders and Wells Fargo. In the commodities market, West Texas Intermediate crude oil fell by 0.7% to $70.21 per barrel Tuesday, driven by renewed concerns regarding demand from China, as stated by D.A.
Davidson in a note to clients. Turning to company performances, shares of Amentum ($AMTM) plummeted by 9.6%, marking the second-steepest decline on the S&P 500. The company disclosed late Monday that its fiscal fourth-quarter pro forma non-GAAP net income and revenue fell year over year. In contrast, Pfizer ($PFE) emerged as the best performer on the S&P 500 Tuesday, with a notable increase of 4.7%, following the pharmaceutical giant's projection of higher earnings for 2025, coupled with revenue expected to align with this year's results as it aims for ongoing disciplined execution and cost reductions. Moreover, Teva Pharmaceutical Industries' ($TEVA) US affiliate and partner Sanofi ($SAN) announced that a phase 2b study investigating Teva's duvakitug drug for ulcerative colitis and Crohn's disease met its primary endpoints.
As a reaction, US-listed shares of Israel's Teva surged by 26%, while those of French drugmaker Sanofi experienced a jump of 6.7%. In the precious metals market, gold fell by 0.4% to $2,660.20 per troy ounce, while silver decreased by 0.3% to $30.97 per ounce..