US stocks closed mostly lower on Tuesday as investors rethink the chances of the Federal Reserve cutting interest rates in the near term and await new inflation data and earnings results later in the week.
How are stocks traded?
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The Dow Jones Industrial Average fell 157.85 points, or 0.4%, to 37,525.16 points.
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The Standard & Poor's 500 index lost 7.04 points, or 0.2%, to close at 4,756.50 points.
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The Nasdaq Composite Index rose 13.94 points, or 0.1%, to close at 14,857.71 points.
On Monday, the Dow Jones Industrial Average rose 217 points, or 0.58%, to 37,683. The Standard & Poor's 500 index rose 66 points, or 1.41%, to 4,764 points. The Nasdaq Composite Index rose 320 points, or 2.2%, to 14,844 points.
What drove the markets?
Stocks closed mostly lower on Tuesday after Monday's rally.
The Fed remains the biggest topic Tuesday, said Sonu Varghese, vice president and global strategist at Carson Wealth.
The market expects there is a 59% chance that the Federal Reserve will start cutting interest rates at its policy meeting in March, according to the CME FedWatch tool. This is down from the roughly 70% probability one week ago.
“We are far from saying that March is a certainty and I think the market is starting to adjust to that,” Varghese said.
Read also: Why stock market bulls should be careful about what they wish for with Fed rate cuts
Varghese said there is tax-motivated profit-taking happening moving into 2024. He added that there is also selling on the idea that Wall Street may have been too optimistic late last year about the pace and extent of interest rate cuts this year.
Federal Reserve Governor Michelle Bowman said Monday that inflation could decline without raising interest rates again, but the economy has not yet reached a point where interest rate cuts are needed.
A major update on inflation will be released on Thursday, when the Consumer Price Index for December will be released.
Meanwhile, earnings season begins on Friday with quarterly results from the major banks.
Although some larger data points will come at the end of the week, investors still have economic data on Tuesday to consider. The trade deficit fell 2% to $63.2 billion in November. The deficit is expected to be the lowest in three years.
“In the coming months, continued high energy exports are expected to narrow the US trade deficit,” said Louis Navellier, Chairman and Founder of Navellier & Associates.
Companies in focus
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Juniper Networks
GNPR,
+21.81%
Shares rose 21.8% on Tuesday after a report that Hewlett Packard Enterprise Co. It is in advanced talks to buy the company, which has a communications networking business and an artificial intelligence business known as Mist AI. -
Netflix company
nfx,
-0.61%
Shares fell 0.6% after the rating was downgraded to neutral from buy, according to Citi analysts. The streaming giant still maintains its $500 price target.
—Jamie Chisholm contributed.
