By Johann M Cherian and Sukriti Gupta
(Reuters) -Wall Street’s main indexes fell on Tuesday as investors turned their attention to upcoming inflation data and quarterly earnings reports, which are expected to provide insights into the health of the U.S. economy.
Stocks received an initial boost after a Labor Department report showed the producer price index rose moderately in December 2024, but this did little to change perceptions about the Federal Reserve’s likely monetary policy path this year.
Traders expect the Fed will deliver 29.4 basis points worth of rate cuts by the end of 2025, according to data compiled by LSEG – lower than the 50-bps reduction the central bank forecast for the year.
Also adding to investor unease, the yield on the benchmark 10-year Treasury note stood at 4.78%, close to its 14-month high. [US/]
The focus will now be on the consumer price index figures, due on Wednesday, along with quarterly earnings from big banks, which are expected to post stronger earnings, fueled by robust dealmaking and trading. An index tracking banks rose 0.4%.
“The market remains gripped with cautiousness… I do expect it to be a good earnings season, but we might have more negative guidance as previously,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
The benchmark S&P 500 is trading at valuations much above its historical long-term averages and poor corporate performance could test further market gains.
At 11:38 a.m. ET the Dow Jones Industrial Average fell 43.52 points, or 0.10%, to 42,253.60, the S&P 500 lost 12.11 points, or 0.21%, to 5,824.11, and the Nasdaq Composite lost 55.03 points, or 0.29%, to 19,033.07.
Five of the 11 S&P 500 sectors slipped, with health stocks down 1.4%. Eli Lilly (NYSE:LLY) lost 7.1% after it forecast fourth-quarter sales of weight-loss drug Zepbound below estimates.
Markets also weighed a report which said that President-elect Donald Trump’s incoming administration was considering gradual tariff hikes, including a plan to increase import duties by 2% to 5% a month.
Kansas City Fed president Jeff Schmid said the impact of Trump’s policies was an “active conversation” at the central bank and that it would respond if either its inflation or employment goals are pushed off course.
Wall Street’s main indexes have witnessed a downward trend since early December, with the price-weighted Dow losing more than 5% from the record high it hit last month, and the benchmark S&P 500 close to a two-month low.
The Fed’s cautious stance on monetary policy easing this year, along with subsequent batches of upbeat economic data, raised investor concerns that U.S. inflation could be running high.
Trump is expected to take office on Jan. 20 and his policy proposals on tariffs and immigration are widely expected to fuel inflation.
Boeing (NYSE:BA) fell 2.7% after the aircraft maker’s annual deliveries dropped in 2024 to their lowest level since the COVID-19 pandemic.
Advancing issues outnumbered decliners by a 2.31-to-1 ratio on the NYSE, and by a 1.31-to-1 ratio on the Nasdaq.
The S&P 500 posted seven new 52-week highs and two new lows, while the Nasdaq Composite recorded 31 new highs and 91 new lows.