Wall Street Pauses After Eight-Day Rally, Nasdaq and S&P 500 End Slightly Lower
Wall Street’s eight-day winning streak came to a halt on Tuesday, with the S&P 500 and Nasdaq 100 indices closing the day with slight declines. This marked the first negative session for both indexes since late July, ending their best winning streaks since May 2024 for the S&P 500 and October 2023 for the Nasdaq 100. The lack of significant economic data released during the day resulted in a noticeable drop in trading volumes across major U.S. stock exchanges, further contributing to the muted market activity.
Key Takeaways:
- S&P 500 and Nasdaq 100 close lower after eight consecutive positive sessions.
- Low trading volumes and Fed Governor Michelle Bowman’s hawkish comments contributed to the decline.
- Energy sector led the decline, pressured by falling oil prices.
- Nvidia and Exxon Mobil were the biggest drags on the S&P 500, while Nvidia and Broadcom weighed down the Nasdaq 100.
Hawkish Comments From Fed Governor Michelle Bowman
Fed Governor Michelle Bowman delivered hawkish comments in the afternoon, expressing continued concerns about inflation. She emphasized that wage gains remain above the pace consistent with the Fed’s inflation goal, highlighting the need to remain vigilant in monitoring price stability while assessing potential risks to the labor market. Bowman’s remarks, indicating the Fed’s ongoing focus on tackling inflation, may have further dampened investor sentiment.
Sector Performance: Energy Leads the Decline, Consumer Staples and Healthcare Rise
The session saw mixed sector performance, with energy stocks lagging the market due to falling oil prices. The Energy Select Sector SPDR Fund (XLE) dropped 2.6%, while WTI oil prices fell below $74 per barrel, reaching a two-week low. Notably, three sectors finished in positive territory:
- Consumer Staples Select Sector SPDR Fund (XLP) rose 0.5%
- Health Care Select Sector SPDR Fund (XLV) rose 0.4%
- Real Estate Select Sector SPDR Fund (XLRE) edged up by 0.1%.
Individual Stock Performance: Nvidia and Exxon Mobil Weigh on S&P 500, DexCom Leads Nasdaq 100 Declines
Nvidia Corp. (NVDA) was the biggest drag on the S&P 500, falling 2.1% and accounting for a 0.15 percentage point loss in the index. Exxon Mobil Corp. (XOM) also contributed significantly to the S&P 500’s decline, falling 3.4% and shaving off 0.04 percentage points from its overall performance.
In the Nasdaq 100, Nvidia again weighed down the index, contributing a 0.18 percentage point loss. Broadcom Inc. (AVGO) also had a negative impact, contributing to a 0.05 percentage point loss. DexCom Inc. and PDD Holdings Inc. (PDD) were among the worst performers in the Nasdaq 100, with the latter dropping 4.6%.
Conclusion: Wall Street takes a breather after a strong run, but a potential pullback may not signal an end to the recent rally
While the recent eight-day winning streak came to an end, investors may want to keep in mind that a single-day decline doesn’t necessarily signify the end of the recent rally. The market’s pause could be viewed as a healthy consolidation period after a robust run. Investors will continue to monitor key economic indicators, including inflation data and Fed policy statements, for clues on the direction of the market moving forward. The market’s response to these developments will provide further insights into the resilience of the recent rally and its potential for sustained growth.
