Dow falls 150 points as stock-market rally stalls after run to records

Wall Street was taking another breather on Tuesday, with the Dow Jones Industrial Average and the S&P 500 edging lower in midday trading after notching multiple record highs last week, while investors eyed fresh data on slipping consumer attitudes and awaited a closely watched inflation gauge due later in the week.

How stocks are trading

  • The S&P 500
    was down 3 points, or less than 0.1%, to 5,066.

  • The Dow Jones Industrial Average
    was slipping 155 points, or 0.4%, to 38,911.

  • The Nasdaq Composite
    was up 15 points, or 0.1%, to 15,990.

On Monday, the three major benchmark indexes logged small declines, with the S&P 500 and Dow industrials snapping their three-day winning streak after ending last week at record highs. Nasdaq Composite still flirted with its first record finish in more than two years.

What’s driving markets

U.S. stocks continued to move sideways on Tuesday after AI chipmaker Nvidia Corp.’s

stunning results sparked a wave of record highs on Wall Street last week.

“It’s more a wait-and-see environment than a risk-on or risk-off environment,” said Art Hogan, chief market strategist at B. Riley Wealth Management, in a phone interview with MarketWatch.

The cautious tone also came as investors eyed economic data in the coming days that may clarify the timing of Federal Reserve interest-rate cuts. The PCE, or personal-consumption expenditures price index, will be published before the market opens on Thursday, and any notable uptick in the gauge may finally kill off any lingering hopes of a May rate cut.

“Nvidia was your must-see TV last week,” Hogan said. This week, it’s the PCE numbers. But after January’s hotter-than-expected print for the consumer-price index, Hogan said markets priced in the chance of fewer interest-rate cuts. “It would take a significant upside surprise to adversely affect markets,” Hogan said.

Traders have scaled back their bets on near-term rate cuts significantly since the start of 2024. They now expect the first cut to arrive in June, not March or May, according to the CME FedWatch Tool. The chance of at least a 25-basis-point rate cut by June was seen at 51.2% as of Tuesday morning.

In other U.S. economic data, consumer confidence fell to 106.7 in February from January’s revised read of 110.9, which was a six-month high. The stumble came after a brightening mood and better numbers in recent looks at sentiment.

The pullback is “probably just a slight bump in the recent upward trend that began in October, and perhaps some pickup in interest rates in January, which curbs housing demand,” said Sonu Varghese, global macro strategist at Carson Group. Looking deep into the numbers, Varghese said the data “suggests the labor market remains in a healthy place.”

The housing market may not be helping consumer’s moods. Home prices in the 20 largest U.S. metro areas reached record highs in December, according to the S&P CoreLogic Case-Shiller home-price index. It’s the 11th straight monthly increase in the index, highlighting a nagging shortage of homes for sale nationally.

Meanwhile, U.S. orders for durable goods dropped by 6.1% in January, a sharper-than-expected decline. Economists polled by the Wall Street Journal were expecting a 5% drop.

Companies in focus

  • Viking Therapeutics Inc.

    shares soared 92.2% after the company announced positive results in a Phase 2 trial of a weight-loss drug to treat obesity and diabetes. Nearly nine in 10 patients on the treatment achieved at least 10% weight loss, versus 4% on the placebo.

  • Macy’s Inc.

    shares were up 4.7% following an earnings beat and the announcement of a strategy to boost growth that includes closing 150 stores. The new approach “challenges the status quo to create a more modern Macy’s,” chief executive Tony Spring said in a statement.

  • Lowe’s Cos. Inc.

    shares were 2.3% higher after a quarterly report from the home-improvement retailer. The company beat on profit but saw a drop in sales, due to slowing do-it-yourself demand and bad weather in January. Its full-year outlook also disappointed analysts.

Jamie Chisholm contributed

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