It appears Wall Street’s rate-cut rally is starting to lose momentum as the S&P 500 heads for its first decline in 10 trading sessions. Why are stocks down today?
Well, it seems the Federal Reserve-induced win streak is finally petering out. Indeed, both the S&P and Nasdaq Composite are saw 1.5% drops today, giving back some of their gains from over the past two weeks.
Interestingly, most of the day was relatively solid for stocks, hovering around even on the day and even up slightly in the mid-afternoon. However, the markets starting plummeting at around 2:30 p.m.
It’s unclear exactly why the markets took such a sudden downward turn. Equities may have wavered in the face of a new all-time high.
Indeed, the S&P briefly touched a new all-time peak on Tuesday at $4,768. The celebration was short-lived, however, as the S&P has since eased back down slightly, currently trending at $4,698.
It’s possible investors are also responding to the recent wave of hawkish commentary made by Fed officials in the wake of Fed Chair Jerome Powell’s shockingly dovish remarks at the recent Fed policy meeting earlier this month. If you recall, Powell has, in a sense, fueled the frenzy by confirming that rate cuts are likely to come in 2024 — a staunch change of attitude.
Since then, a number of Fed presidents have attempted to temper notions of a rate cut coming as early as March. This includes Chicago Fed President Austan Goolsbee.
“We don’t debate specific policies, speculatively, about the future. We vote on that meeting,” Goolsbee told CNBC on Monday, pushing back against the notion of impending rate cuts.
Why Are Stocks Down Today?
Only 19 stocks in the S&P gained today, the narrowest pool since March according to The Wall Street Journal. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) was one of these stocks, up a little over 1% today on news that the company plans to reorganize its advertising sales unit.
On the flip side, FedEx (NYSE:FDX) stock is one of the day’s leading losers, closing down 12% after missing quarterly profit estimates and announcing weak full-year revenue guidance.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
