US close: Tech and cruise stocks lead Wall Street lower

US stock markets finished mostly lower on Tuesday as investors took profits following the recent end-of-year rally, as cautious trading took over ahead of a busy week for economic data.

The Dow Jones Industrial Average finished 0.07% higher at another record high close of 37,715.04; however, the S&P 500 fell 0.57% and the Nasdaq dropped 1.63% on the back of heavy fall from Apple, the world's largest company by market capitalisation.

News that an Iranian warship entered the Red Sea was dampening risk appetite, given that the channel handles around one eighth of global commerce, as nations continue to take action against Yemen's Houthi rebels who have attacked ships bound for Israel.

Danish shipping giant Maersk on Tuesday joined a host of other transport companies to suspend all shipping through the Red Sea and Gulf of Aden until further notice after one of its vessels came under attack from Houthi militants over the weekend.

On the macro front, S&P Global's US manufacturing PMI fell to 47.9 points in December, down from 49.40 in November and revised lower from a preliminary reading of 48.2. Output returned to a decline and the downturn in new orders gathered pace, selling prices increased at the quickest rate since April, and muted client demand led to a third successive monthly drop in employment. Business confidence, on the other hand, rose to a three-month high.

Elsewhere, US construction spending rose 0.4% in November to a seasonally adjusted annual rate of $2.05bn, according to the Census Bureau. This followed an upwardly revised 1.2% rise in October and fell short of consensus estimates for a reading of 0.6% growth.

Economic data schedule ramps up

With the Federal Reserve resolute in their commitment to watch incoming economic indicators before making any signal about future monetary policy, Wednesday's Job Openings and Labor Turnover Survey (or JOLTS report) will be closely watched. It is expected to show job openings rising to 8.850m in November from 8.733m in October.

The data comes before Thursday's ADP Employment Report and the all-important non-farm payrolls figure for December on Friday. Minutes of the latest Federal Open Market Committee meeting will also be released on Wednesday.

"While [Fed chair Jerome] Powell clearly alluded to the possibility of easing, Fed officials since the Dec FOMC meeting have pushed back on the idea of that happening imminently. In that vein, we expect this week's minutes to show that the FOMC is not entertaining the case for rate cuts just yet," said analysts at TD Securities.

Apple hit by downgrade

Apple shares were falling sharply on Tuesday after analysts at Barclays cut their rating on the stock from 'equal weight' to 'underweight'. The bank said iPhone 15 sales had been "lacklustre" and that strong growth in emerging markets wasn't enough to offset sales weakness in China and other developed regions. Barclays also predicted that the iPhone 16 launch would be equally underwhelming.

After a near-50% surge in the share price in 2023, the bank said: "We expect reversion after a year when most quarters were missed and the stock outperformed."

The stock fell 3.6% to $185.64 by the close of play, along with tech heavyweights Intel, IBM and Microsoft which were also nursing heavy losses.

Cruise operators were also performing badly as investor sentiment soured after record gains in 2023, with Royal Caribbean, Norwegian Cruise Line Holdings and Carnival Corp all falling around 7-8%.

Tesla shares were lower on the news that Chinese rival BYD became the world's biggest seller of electric vehicles in the fourth quarter of 2023. The automaker sold over 526,000 electric vehicles in the last three months of 2023, more than Tesla's 485,000.

Oil giant Chevron edged higher despite announcing it would be taking writedowns of up to $4bn in the fourth quarter due to "continuing regulatory challenges" in California.

Dow Jones - Risers

Merck & Co. Inc. (MRK) $113.17 3.81%
Amgen Inc. (AMGN) $297.36 3.24%
Verizon Communications Inc. (VZ) $38.81 2.93%
Unitedhealth Group Inc. (UNH) $539.03 2.39%
Johnson & Johnson (JNJ) $159.80 1.96%
Walgreens Boots Alliance, Inc. (WBA) $26.61 1.93%
Coca-Cola Co. (KO) $59.76 1.41%
Procter & Gamble Co. (PG) $148.60 1.41%
Walmart Inc. (WMT) $159.28 1.03%
JP Morgan Chase & Co. (JPM) $171.82 1.01%

Dow Jones - Fallers

Intel Corp. (INTC) $47.63 -5.22%
Apple Inc. (AAPL) $185.41 -3.70%
Boeing Co. (BA) $251.38 -3.56%
Salesforce.Com Inc. (CRM) $255.76 -2.80%
Nike Inc. (NKE) $106.52 -1.89%
Microsoft Corp. (MSFT) $370.39 -1.50%
International Business Machines Corporation (CDI) (IBM) $161.51 -1.25%
Caterpillar Inc. (CAT) $292.45 -1.09%
Home Depot Inc. (HD) $344.54 -0.58%
Visa Inc. (V) $258.89 -0.56%

S&P 500 - Risers

Incyte Corp. (INCY) $65.41 4.17%
Travel + Leisure Co (TNL) $40.72 4.17%
Merck & Co. Inc. (MRK) $113.17 3.81%
Wynn Resorts Ltd. (WYNN) $94.57 3.79%
Tapestry Inc. (TPR) $38.13 3.57%
CenturyLink Inc. (LUMN) $1.89 3.55%
Nektar Therapeutics (NKTR) $0.58 3.50%
Centene Corp. (CNC) $76.80 3.49%
Dollar General Corp (DG) $140.64 3.45%
Campbell Soup Co. (CPB) $44.68 3.35%

S&P 500 - Fallers

Norwegian Cruise Line Holdings Ltd (NCLH) $18.32 -8.58%
Royal Caribbean Cr (RCL) $119.88 -7.42%
Carnival Corp. (CCL) $17.26 -6.90%
Advanced Micro Devices Inc. (AMD) $138.12 -6.30%
Intel Corp. (INTC) $47.63 -5.22%
Applied Materials Inc. (AMAT) $153.76 -5.13%
Lam Research Corp. (LRCX) $744.64 -4.93%
Microchip Technology Inc. (MCHP) $86.39 -4.20%
KLA-Tencor Corp. (KLAC) $557.23 -4.14%
Netflix Inc. (NFLX) $467.24 -4.03%