Stocks finished mixed Tuesday, as investors looked to the start of the Federal Reserve's two-day policy meeting following solid retail sales data that could test the case for big rate cuts.
The Dow Jones Industrial Average slipped 72 points, or 0.17%, to end the session at 41,550.06, while the S&P 500, which had reached an intraday high, lost 0.15% to 5,624.89, and the tech-heavy Nasdaq gained 0.20% to finish the day at 17,628.06.
Adam Turnquist, chief technical strategist for LPL Financial, said that investors are preparing for the first rate cut in over four years.
“Tomorrow’s inflation report and next week’s jobs data could dictate the size of the September cut — another weak employment report would likely push probabilities toward a 0.50% reduction,” he said. “We believe a soft landing is still viable but not guaranteed, setting stocks up for a potential volatile fall, likely exacerbated by the November election.”
Turnquist noted that stocks have historically traded flat to negative in the first few months after a rate-cutting cycle begins but tend to move higher over the following 12 months.
Updated at 1:25 PM EDT
Backtrack
The S&P 500, which hit a fresh record high of 5,670.81 points earlier in the session, was last marked 4 points lower from last night's close as investors pared riskier bets heading into tomorrow's Fed rate decision.
Benchmark 10-year Treasury note yields bumped modestly higher, rising 4 basis points to 3.646%, following better-than-expected readings for August retail sales and industrial production, as well as a muted auction of $13 billion in 20-year paper.
Rate-sensitive 2-year notes, meanwhile, rose 4 basis points to 3.594%, as the dollar index added 0.2% to trade at 100.973 against a basket of its global currency peers.
* S&P 500 BRIEFLY HIT NEW INTRADAY RECORD HIGH, ON TRACK FOR FIRST RECORD CLOSE SINCE JULY 16
— Carl Quintanilla (@carlquintanilla) September 17, 2024
@reuters $SPX 🇺🇸 pic.twitter.com/aCMaUF9qeh
Updated at 11:33 AM EDT
Intel bounce
Intel shares are holding earlier gains, and were last marked 6% higher on the session at $22.19 each, following a major overhaul of its chipmaking business and details of a lucrative new contract with Amazon Web Services.
"Intel confirmed intent to more efficiently manage capex, notes a planned 15,000 workforce reduction by year-end is more than halfway complete, and is reclassifying certain businesses to better manage R&D spend,' said CFRA analyst Angelo Zino.
"Overall, we view the news/expanded AWS partnership and greater foundry emphasis as positives, but lack of details and existing competitive threats keep us on the sidelines," he added.
Related: Intel CEO Pat Gelsinger's turnaround plan gets massive boost.
Updated at 9:37 AM EDT
S&P 500 on record watch
The S&P 500 was marked 26 points, or 0.46% higher in the opening minutes of trading and is now within 10 points of the intra-day record high it reached in mid July.
The Nasdaq, meanwhile, gained 125 points, or 0.72%, while the Dow was last marked 145 points higher from last night's record close.
“Today's retail sales number is solid but not a game-changer, and the market is still left with the same question: Will the Fed go for 25 basis points or 50 basis points?," said Ken Tjonasam, portfolio strategist at Global X.
"While retail sales are holding steady, it wasn’t the game-changing data point that could tip the Fed’s hand either way,” he added.
S&P 500 Opening Bell Heatmap (Sept. 17, 2024)$SPY +0.46%🟩$QQQ +0.93%🟩$DJI +0.73%🟩$IWM +0.32%🟩 pic.twitter.com/1W8nDQaNf3
— Wall St Engine (@wallstengine) September 17, 2024
Updated at 9:20 AM EDT
Making stuff, too
Industrial production jumped higher last month, notching its second- best growth rate of the year, thanks in part to solid assembly numbers from the auto industry and a rebound in mining activity.
The headline pace of 0.8% was well ahead of the Street's 0.2% forecast, with manufacturing output rising 0.9% against a Wall Street estimate of 0.3%.
Aug Industrial Production matches for the second-best of the year m/m pic.twitter.com/34zpZaU4Np
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) September 17, 2024
Updated at 8:49 AM EDT
Shop till you drop
Retails sales nudged higher last month, defying forecasts of a consumer spending pullback and adding yet another layer of complexity to the Fed's rate cut debate.
August sales rose 0.1% on the month to just under $711 billion, topping Street forecasts, with an upward revision to the overall July tally as well, suggesting solid consumer spending patterns in the face of a cooling job market.
Stocks were modestly higher following the release, with the S&P 500 priced for a 24 point gain and the Nasdaq looking at a 112 point opening bell advance.
Benchmark 10-year Treasury note yields rose 1 basis points to 3.629% following the data release, while 2-year notes were up 4 basis points to 3.596%.
US Retail Sales: if one was hoping for the August sales report to tip the Fed rate decision it won’t. I still think 25bps is the correct call given sticky service sector.
— Joseph Brusuelas (@joebrusuelas) September 17, 2024
Stock Market Today
Stocks ended higher on Monday following a tepid session that saw benchmark 2-year Treasury note yields, which are the most-sensitive to interest rate changes, fall to a two-year low. That market move came amid a rush in bets on a half-point interest-rate cut from the Fed tomorrow in Washington.
The tech-focused Nasdaq, however, was held down by the ongoing slide in Apple (AAPL) , which hit a one-month low following reports of muted demand for its new iPhone 16. That weakness bled into AI-chip makers and the broader tech sector, with the Nasdaq ending 0.52% lower on the session.
Focus Tuesday will shift to the Commerce Department's reading of August retail sales at 8:30 a.m. U.S. Eastern Time, which is expected to show a modest dip in the headline reading thanks to a 3% decline in gas prices. Another report on tap: industrial production at 9:15 a.m.
With the Fed set to unveil its September rate decision tomorrow afternoon, stocks are likely to remain range-bound. Investors will focus on movements in the bond market, as traders await both Chairman Jerome Powell's statement and the central bank's new economic projections for the next two years.
Related: This Fed news may be more important than a rate cut this week
Benchmark 2-year-note yields were last marked 3 basis points higher from yesterday's close at 3.553% while 10-year notes were little changed at 3.614%.
On Wall Street, futures contracts tied to the S&P 500 suggest an opening bell gain of around 22 points, with the Dow Jones Industrial Average called 120 points higher from last night's record close.
The Nasdaq, meanwhile, is called 110 points higher thanks in part to early gains for Nvidia (NVDA) and Tesla (TSLA) .
Other stocks on the move include Intel (INTC) , which leaped 7.65% following confirmation of a $3.5 billion contract with the U.S. government as well as news of a chip-supply deal with Amazon (AMZN) and plans to turn its foundry business into a stand-alone business.
Microsoft (MSFT) shares were also active, rising 1.9% after the tech giant unveiled plans for a new $60 billion buyback while boosting its quarterly dividend.
Related: Markets push for big Fed rate cut after inflation reports
In overseas markets, Europe's Stoxx 600 was marked 0.65% higher in early Frankfurt trading despite some disappointing investor sentiment data from Germany, while Britain's FTSE 100 rose 0.74% higher in London.
More Wall Street Analysts:
- Analyst says Intel should drop a key business to survive
- Analysts adjust Bookings.com stock price target on travel market
- Analysts place bets on Las Vegas strip casino stocks
Overnight in Asia, Japan's Nikkei 225 fell 1.03% on its return from the Monday Respect the Aged holiday as the yen rose to a one-year high of around 140.51 against the U.S. dollar.
The regional MSCI ex-Japan benchmark, meanwhile, was marked 0.57% higher into the close of the session.
Related: Veteran fund manager sees world of pain coming for stocks
