Stock market today: Dow, S&P 500, Nasdaq slide as Powell says Fed in no 'hurry' on rate cuts
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US stocks slid on Thursday as the post-election rally stalled further and investors assessed remarks from Federal Reserve Chair Jerome Powell, who said in a speech that the central bank does not need to be "in a hurry" to lower interest rates.
Markets took a noticeable step lower after Powell's comments. The Dow Jones Industrial Average (^DJI) slipped 0.5%, or more than 200 points, while the S&P 500 (^GSPC) dipped 0.6%. The Nasdaq Composite (^IXIC) was down about 0.7%, coming off a mixed day for the three major gauges.
Though the mood is muted, stocks are still near recent records after the latest consumer inflation data kept hopes for a December rate cut aloft. But a reading on wholesale inflation showed prices firmed slightly more than expected in October, prompting fresh questions on the Fed's path next year.
The focus is on how the Federal Reserve and its chair see inflation developing as investors gauge the odds of rates staying higher for longer. To that point, Powell stressed the US's economic strength, saying the Fed would be "watching carefully" to make sure inflation measures stay within an acceptable range.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Meanwhile, Republicans held on to their slim majority in the House of Representatives, handing President-elect Donald Trump and his party a "trifecta" — unified control of power across Washington. The sweep limits curbs on implementing the incoming president's aggressive economic agenda, which has helped spur the post-election breakneck rally in stocks.
In some corners of the market, the "Trump trade" is showing signs of fatigue. Tesla stock (TSLA) declined over 5% as Reuters reported Trump's administration will look to eliminate the $7,500 EV tax credit for consumers.
Meanwhile, vaccine stocks, including Moderna (MRNA) and Novavax (NVAX), slid into the close after reports said Trump will name anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services.
LIVE COVERAGE IS OVER 13 updatesVaccine stocks slide after report RFK Jr. will be tapped to lead HHS
Vaccine stocks slipped into the close on Thursday afternoon after Politico reported Donald Trump will name anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services.
Shares of Moderna (MRNA) and Novavax (NVAX) both fell more than 5% following the report while fellow vaccine maker Pfizer (PFE) also slid more than 2.5%.
Fed does not need to 'be in a hurry' to lower rates: Powell
Yahoo Finance's Jennifer Schonberger reports:
Federal Reserve Chair Jay Powell said the central bank does not need to be "in a hurry" to lower interest rates due to the economy’s strength, and that the Fed would be "watching carefully" to make sure certain inflation measures stay within an acceptance range.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in prepared remarks for a speech in Dallas.
“The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
'DOGE' formation sinks government contractor stocks
Another Trump trade is on the move.
Shares of government contractors drifted lower on Thursday amid speculation that the new "DOGE" (Department of Government Efficiency) will be looking for areas to cut back on government spending. It's unclear exactly what action the newly formed department led by Elon Musk and Vivek Ramaswamy will take.
But Musk has already suggested eliminating hundreds of existing agencies and cutting the more than $6 trillion annual budget by $2 trillion.
And the market appears to be betting that some of those spending cuts will impact publicly traded government contractors. Shares of Science Applications International Corporation (SAIC), Booz Allen Hamilton (BAH), KBR (KBR), and Parsons Corporation (PSN) were all off 6% or more on Thursday.
Interestingly, Lockheed Martin (LMT) stock fell a more measured 3%, perhaps serving as a reminder for investors that not all businesses that work with the government are created equal. And for now, the market doesn't see big cuts coming to defense spending with Lockheed Martin.
2 firm inflation prints just made the Fed's 2025 rate cut path a lot 'murkier'
October inflation readings out this week have shown little progress toward the Fed's 2% inflation target, putting into question how deeply the Federal Reserve will cut interest rates in 2025.
On Wednesday, the "core" Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, showed prices increased 3.3% for the third consecutive month during October. Then, on Thursday, the "core" Producer Price Index (PPI) revealed prices increased by 3.1% in October, up from 2.8% the month prior and above economist expectations for a 3% increase.
Taken together, the readings are adding to an overall picture of persistent, sticky inflation within the economy. Economists don't see the data changing the Fed's outlook come December. And markets agree with the CME FedWatch Tool currently placing a nearly 80% chance the Fed cuts rates by 25 basis points at its December meeting.
But the lack of recent progress on the inflation front could prompt the Fed to adjust its Summary of Economic Projections (SEP), which had forecast the central bank would cut interest rates four times, or by one percentage point in total, throughout 2025.
"PPI won’t decisively alter the Fed’s easing bias, but it makes charting the policy outlook murkier," Nationwide financial market economist Oren Klachkin wrote in a note to clients today. "We anticipate 75 [basis points] of cumulative Fed easing in 2025, but risks seem to be tilting toward a more gradual pace of easing."
Trump will eliminate EV tax credit: Reuters
President-elect Donald Trump's administration is planning to eliminate the $7,500 tax credit provided to consumers, according to a report from Reuters.
Ford (F), General Motors (GM), and Tesla (TSLA) stock all moved lower following the report.
Bitcoin pares gains, hovers above $88,000
Bitcoin (BTC-USD) pared earlier gains, hovering above $88,00 per token by 12:30 p.m. ET.
The world's largest cryptocurrency has been at the center of the Trump trade, which has catalyzed moves across a range of assets after Donald Trump's White House win last week.
On Thursday morning, each token was trading around $91,000 after reaching new highs north of $93,000 in the prior session.
Year to date, bitcoin is up about 100%.
Bob Iger says Disney doesn't 'need more assets right now' to thrive in 'disrupted media world'
Yahoo Finance's Alexandra Canal reports:
Disney (DIS) CEO Bob Iger doesn't think the company needs to engage in mergers and acquisitions to compete in streaming.
"We don't really need more assets right now, either from a distribution or from a content perspective, to thrive in [a] disruptive media world," the executive told investors on the company's fourth quarter earnings call Thursday morning.
"In a way, we've already consolidated," he said, citing the acquisition of 21st Century Fox, announced in late 2017. "And while I think we'll always look opportunistically at opportunities, as we've proven in the past, we certainly don't shy away from those ... We, in many respects, have already consolidated."
Disney shares rose on Thursday after the entertainment giant issued better-than-expected guidance and quarterly results beat estimates.
Read more here.
Tesla slides 3% as post-election Trump trade wanes
Tesla (TSLA) shares declined more than 3.5% on Thursday as investors are taking profits off the table following a massive surge in the "Trump trade" favorite.
With Thursday's slide, the stock is still up more than 25% since Donald Trump's White House victory last week over optimism that CEO Elon Musk's close ties to the president-elect will loosen regulations around autonomous driving.
Meanwhile, on Wednesday the electric vehicle giant issued its sixth recall this year. The company recalled 2,400 Cybertruck pickups due to a faulty part could lead to a loss of power and increase the risk of a collision.
Tapestry jumps 11%, Capri sinks after companies end merger plans
Tapestry (TPR) shares soared on Thursday to an 11-year high after the parent of Coach and Capri Holdings (CPRI) called off its merger plans.
The fashion companies mutually decided to abandon their $8.5 billion tie-up, citing regulatory hurdles.
In a statement, Capri said that "the required closing condition of receiving necessary US regulatory approvals was unlikely to be met by the merger agreement’s outside date of February 10, 2025."
Shares of Capri fell 2% while Tapestry stock jumped as much as 11%.
Disney pops 10% after earnings beat, guidance tops estimates
Yahoo Finance's Alexandra Canal reports:
Disney (DIS) on Thursday reported fiscal fourth quarter earnings per share and revenue that topped Wall Street estimates, as its direct-to-consumer business built on recent momentum and swung to a profit.
Strong guidance for the next two years also fueled investor optimism, sending shares up over 10% in early trading following the results.
Read more here.
Dow, S&P 500, Nasdaq tick higher with Powell speech on deck
The major averages opened mixed on Thursday as investors awaited a speech from Fed Chairman Jerome Powell while assessing a Republican sweep in Congress.
The Dow Jones Industrial Average (^DJI) ticked up 0.2%, while the S&P 500 (^GSPC) gained slightly. The Nasdaq Composite (^IXIC) also rose 0.1%.
Republicans won control of the House on Wednesday, completing their 2024 election "trifecta."
Investors have been watching a rising US Dollar Index (DX-Y.NYB) and the impacts it could have on the markets. Commodities like oil and gold, which are invoiced in dollars, have been under pressure in recent days.
Bitcoin (BTC-USD) held above $91,000 on Thursday morning after climbing past $93,000 in the prior session.
The world's largest cryptocurrency has been at the center of the Trump trade, which has catalyzed moves across a range of assets after Donald Trump's White win last week.
The token is up more than 30% since Election Day.
Initial jobless claims drop to lowest level since May
Initial jobless claims fell by 4,000 to their lowest level since May, at 217,000 for the week ending Nov. 9. The reading was less than the 220,000 claims expected by economists.
Good morning. Here's what's happening today.
Economic data: Initial jobless claims (week ending Nov. 9); Producer Price Index (October); Import & Export prices (January); Industrial production (January); NAHB housing market index February (44 prior)
Earnings: Advance Auto Parts (AAP), Applied Materials (AMAT), Disney (DIS), JD.com (JD), Oklo (OKLO)
Here are some of the biggest stories you may have missed overnight and early this morning:
'DOGE' jokes aside, Musk's new side hustle is Tesla's key edge
FBI raids Polymarket CEO's home, seizing phone, electronics
Disney surges as earnings beat, streaming profit impresses
House wins clinch the GOP trifecta. Here's what's first on the agenda.
ASML upholds bullish sales outlook in bet on AI demand
