Stocks continued to slide away from their recent record highs as Wall Street experienced a quiet week. The S&P 500 was down 0.4% in early trading on Tuesday, set for a second consecutive drop after reaching an all-time high last week. The Dow Jones fell 141 points, and the Nasdaq composite dropped 0.9%. Apple weighed heavily on the market, facing concerns over sluggish iPhone sales in China. Treasury yields slipped ahead of upcoming reports on the services industry and factory orders. Later in the week, data on job openings and overall employment will be released.
Wall Street showed modest declines on Tuesday as retailers released their holiday season results and in anticipation of Federal Reserve Chair Jerome Powell’s upcoming appearance before Congress.
Futures for the S&P 500 and the Dow Jones Industrial Average fell by 0.3% and 0.2%, respectively.
Momentum has slowed for U.S. stocks after reaching record highs, with signs of cooling inflation, potential interest rate cuts, and a resilient U.S. economy despite recession predictions.
While earnings season is wrapping up, several major retailers will report their latest quarterly results, providing insights into consumer sentiment regarding the economy and personal finances.
Target reported a 58% increase in fourth-quarter profits, surpassing Wall Street expectations due to cost-cutting measures and efficient inventory management, leading to an 8.5% surge in shares before the opening bell on Tuesday.
Other retailers such as Costco Wholesale, Gap, and Nordstrom also reported their holiday season numbers this week.
AeroVironment, a Virginia-based defense contractor specializing in drones, saw a 17.5% increase in its stock price before the bell after exceeding Wall Street’s sales forecast and nearly doubling profit targets.
Several events scheduled for this week, including Powell’s testimony and Friday’s report on the U.S. job market, could impact the market.
In Europe, major indices like Germany’s DAX, France’s CAC 40, and the UK’s FTSE 100 rebounded to even after slight morning declines.
Hong Kong’s benchmark index dropped 2.6% after China’s premier announced a target of around 5% economic growth for the year, in line with expectations. China’s economy grew at a 5.2% annual rate last year, following a 3% growth in 2022.
Li Qiang, speaking at the opening meeting of China’s National People’s Congress, also announced the issuance of 1 trillion yuan ($139 billion) in long-term bonds to address funding gaps, support financially strained local governments, and invest in technology and social support.
However, investors were disappointed by the government’s decision to keep its deficit at 3% of China’s GDP, indicating a cautious fiscal policy approach.
The annual budget report and Li’s address received a tepid response, with Hong Kong’s Hang Seng index dropping 2.6% and the Shanghai Composite index barely moving throughout the day.
Japan’s Nikkei 225 index closed flat, just below Monday’s record close, while South Korea’s Kospi dropped 0.9%, and Australia’s S&P/ASX 200 fell 0.2%.
In currency markets, the U.S. benchmark crude oil dropped to $78 per barrel, while Brent crude fell to $82.22 per barrel. The U.S. dollar remained unchanged against the Japanese yen and fell slightly against the euro.
On Monday, the S&P 500, Dow Jones Industrial Average, and Nasdaq composite all saw declines, with the S&P 500 slipping 0.1% from its latest all-time high.
Featured Image: Freepik @ wirestock
