Dow drops 200 points as postelection rally sputters U.S. stocks fell on Thursday after Federal Reserve Chairman Jerome Powell suggested the strength of the economy may warrant some patience on future interest rate cuts. Forex Mony
Dow Jones Industrial Average
The S&P 500 fell 207.33 points, or 0.47%, to close at 43,750.86.
The Nasdaq Composite dropped 0.6% to close at 5,949.17, while the Dow Jones Industrial Average fell 0.6% to close at 5,949.17.
It fell 0.64% to 19,107.65.
Stocks fell after Federal Reserve Chairman Jerome Powell said in Dallas that the central bank does not need to be “rushed” to cut interest rates. The 30-stock Dow Jones Industrial Average fell more than 250 points to a session low.
“The strength we see in the economy right now gives us the ability to be careful with our decisions,” Powell said.
Fed funds futures futures reflected a decline in the odds of a quarter-point rate cut at the central bank’s December meeting, falling to about 62% by Thursday afternoon. That’s down from 82.5% earlier in the day.
So-called “Trump deals” have also lost steam as the market rally has slowed.
The benchmark Russell 2000 index of small-cap stocks fell 5.8%.
It fell more than 1% and underperformed major averages.
The moves come after the October producer price index, released Thursday, rose 0.2%, matching economists polled by Dow Jones.
The consumer price index excluding food and energy grew faster than expected. The October CPI came in as expected on Wednesday, but it still suggested the Fed’s battle against inflation is far from over. The core CPI rose 0.3% for a third straight month, with the 12-month growth rate at 3.3%.
Investors are now weighing whether the post-election rally following Donald Trump’s decisive victory has room to run after pushing major averages to new highs. The Dow closed above 44,000 for the first time on Monday, and both the S&P 500 and Nasdaq Composite hit new highs.
“After an explosive week last week, we’re now starting to feel a bit tired and stressed,” said Guy Woods, chief global strategist at Freedom Capital Markets. “But we’re holding on to most of those gains, so I think this week will be constructive if anything.”
Stocks close lower on Thursday
U.S. stocks closed lower on Thursday, after comments from Federal Reserve Chairman Jerome Powell suggested the central bank may be more patient in deciding when to cut interest rates.
The S&P 500 fell 0.6% to 5,949.17, while the Nasdaq Composite dropped 0.64% to 19,107.65. The Dow Jones Industrial Average lost 207 points, or 43,750.86.
Rivian, Tesla fall on report Trump transition team plans to end Biden electric vehicle tax credit
Rivian Automotive Inc., Tesla Inc. shares
Tech stocks fell more than 12% and 5%, respectively, after a Reuters report that President-elect Donald Trump’s transition team plans to eliminate the $7,500 consumer tax credit on electric vehicle purchases.
While ending the tax credit could have dire consequences for the already slow transition of the U.S. electric vehicle industry, Tesla representatives have told Trump’s transition committee that they support ending the subsidy, sources told Reuters. Tesla CEO Elon Musk said earlier this year that ending the subsidy could hurt Tesla’s sales but could also destroy its domestic electric vehicle competitors, the report said.
Tesla has been a major beneficiary of the post-election stock market rally given CEO Elon Musk’s close relationship with Trump. The stock has surged more than 43% over the past month.
Meanwhile, Rivian shares are up just 0.5% over the past month but down 55% for the year. Thursday’s report gave back much of Rivian’s 13.7% gain from the previous session, which was driven by a joint press release earlier this week from Rivian Automotive and Volkswagen AG that said the size of their joint venture had increased to $5.8 billion.
Bank of America Downgrades Hims & Hers Health Shares Twice, Accelerating Share Selloffs
Hims & Hers Health
U.S. stocks fell another notch after Bank of America downgraded its shares twice to underperform from buy.
Amazon analyst Allen Lutz said that Hims & Hers’ entry into the hair loss and erectile dysfunction markets would put downward pressure on the pricing the company would be able to charge for its competing products. It could also hurt the company’s ability to attract new customers, reducing the value of each new customer it acquires.
Lutz lowered his price target from $32 to $18. Although Him shares have recently fallen more than 25%, Lutz’s target means the stock could fall further.
State Street’s Bartolini says ‘post-election euphoria’ helped fuel record year for ETFs
The U.S. ETF industry posted record inflows this week, helped by “post-election euphoria,” said Matt Bartolini, head of ETF research for the Americas at State Street Global Advisors.
“As we approached the election, ETF inflows were already on track to break records,” Bartolini said. “What happened was that the market environment turned and became very lively… and suddenly, assets were rushing into ETFs from a broad range of investors.”
Bartolini also pointed to outflows into broad-based index funds, and singled out the SPDR S&P Regional Banking ETF (KRE)
as one fund that benefited from the market’s response to the election. The fund has had net inflows of more than $1.1 billion over the past week, according to FactSet.
Bartolini also said he has set Dec. 9 as the date for U.S. ETF industry inflows to reach $1 trillion this year.
Industrials Head for Worst Day Since September
Industrial stocks as represented by the SPDR Industrials (XLI) ETF
The ETF is headed for its worst day since Sept. 3. The ETF is down 1.3%.
The XLI ETF is headed for a losing week, its third in the past four. The fund is down 2.3% from its all-time high.
Among the biggest laggards in the ETF are Leidos Holdings
and Amentum Holdings
In fact, Leidos is headed for its worst day since May 2023, when it fell 14.5%.
JPMorgan warns ResMed shares could come under pressure before year-end
It’s been a strong year for ResMed
To date, Apple shares are up about 35%, slightly outpacing the S&P 500’s 33% gain, but JPMorgan analyst David Lo warned that the stock could come under pressure before the end of the year.
“First, we expect Eli Lilly
“to expand the FDA’s Zepbound label to include patients with obstructive sleep apnea (OSA), following the results of the SURMOUNT-OSA trial,” Lo wrote in a note to clients. “Second, Novo Nordisk
will release results from its Phase 3 trial of CagriSema, a drug that provides more than 25% weight loss, a greater reduction than currently approved drugs.
While these events could weigh on ResMed shares, Lo still likes the company’s story and rates the stock as overweight. The analyst expects that marketing of obesity drugs will raise awareness of the risks of sleep apnea and encourage more patients to seek treatment, which will stimulate demand for all treatments, including the continuous positive airway pressure devices sold by ResMed.
Evercore ISI says post-election rally in shipping stocks may be fading
The initial surge in shipping stocks after President-elect Donald Trump’s victory last week may have been the best-case scenario for the group, according to Evercore ISI.
“While we believe the demand surge is likely to occur in the first half of 2025 and the slowdown is officially over, there won’t be another tax stimulus like 2018, imports aren’t as important as manufacturing for shipping demand, and a significant portion of the group has already reclassified, leaving plenty to play for in the stock,” analyst Jonathan Chappell said in a note to clients.
Some of the best performing shipping stocks since the election include Old Dominion Freight Line
, up 9%, and Werner
, up 7%.
“At best, there’s a short-term shipping boom that pushes estimates higher for six months before an inevitable drawdown in inventories leads to a capacity surplus that’s made even bigger by optimism, and at worst, the forward momentum is futile.” “Either way, the risk/reward is tilted to the downside going forward, and we will be off most of the stock in early 2025,” Chappell said.
