JaysonPhotography
U.S. stocks on Tuesday ended in the red after the latest Federal Reserve meeting minutes showed that all officials saw restrictive interest rates for some time.
Market participants are also looking ahead to quarterly results from chip giant Nvidia (NVDA) after the closing bell.
The tech-heavy Nasdaq Composite (COMP.IND) slipped 0.59% to close at 14,199.98 points. The benchmark S&P 500 (SP500) retreated 0.20% to settle at 4,538.22 points, while the blue-chip Dow (DJI) fell 0.18% to finish at 35,088.29 points.
Of the 11 S&P sectors, seven ended in negative territory, led by Technology and Real Estate. Health Care topped the gainers.
“As the markets prepare for Thursday’s U.S. Thanksgiving holiday and Black Friday, the top shopping day of the year, stocks and bonds were quiet, with marginal declines in the bonds and stocks. Tuesday’s most significant move came in the gold market, with COMEX December futures rallying over $20 per ounce to over the $2,000 level,” Andrew Hecht, investing group leader of Hecht Commodity Report, told Seeking Alpha.
“Gold’s resilience over the past months in the face of the highest interest rates in years was a testament to underlying strength that could vault the precious metal to new all-time highs over the coming weeks and months,” Hecht added.
Since sliding into correction territory on October 27, the S&P 500 (SP500) has risen 10.4% up to its last close. This marks the fastest rebound from correction for the benchmark index since the 1970s, according to data from Dow Jones. The advance has been largely sparked by a general market consensus that the Fed is done hiking rates.
However, the minutes of the Fed’s October 31 to November 1 monetary policy committee meeting titled slightly hawkish, with all officials saying that they would “proceed carefully” and would continue to make policy decisions at every meeting based on incoming economic data.
“The minutes to the Nov 1 FOMC meeting confirmed the message in Powell’s press conference: the debate has shifted from ‘how much more tightening’ to ‘how long to keep rates elevated.’ While further hikes are still on the table, that would only occur ‘if incoming information indicated that progress toward the Committee’s inflation objective was insufficient’—which sounds more like a risk than a baseline scenario,” JPMorgan’s Michael Feroli said.
The fixed-income markets showed a bigger reaction to the Fed minutes, with longer-end Treasury yields in particular reversing course and moving up. They have since fallen back lower. The longer-end 30-year yield (US30Y) was down 1 basis point to 4.56%, while the 10-year yield (US10Y) was also down 1 basis point to 4.41%. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 2 basis points to 4.89%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
Turning to Tuesday’s economic calendar, existing home sales data was the only major indicator on the docket. The headline number for October fell on a M/M basis to 3.79M compared to a consensus figure of 3.90M.
There will be significant attention on Nvidia (NVDA), with the chip giant set to report its quarterly financial figures after the closing bell. The stock has more than tripled in value YTD on the back of strong results and bullish guidance driven by the company’s artificial intelligence capabilities. Investors are again expecting a big jump in quarterly sales and profit.
Among other earnings-related moves on Tuesday, Agilent Technologies (A) ended as the top percentage gainer on the S&P 500 (SP500) after the provider of instruments to laboratories delivered a quarterly top and bottom line beat.