US close: Stocks mostly lower as nerves kick in ahead of CPI, earnings

dl wall street times square new york city night pedestrians nasdaq billboards trading nyc generic nypd unsplash — Sharecast / Meric Dagli via Unsplash

US stocks finished mostly lower on Tuesday with the Dow falling for the first time in four sessions as investors took profits ahead of a crucial inflation report and the start of earnings season later in the week.

The Dow declined 0.4% but remains close to its record high, while the S&P 500 finished 0.2% lower, pulling back after its biggest one-day gain in two months. The Nasdaq, however, inched 0.1% higher.

“Most major global stock indices couldn't capitalise on Monday's tech-driven rally and instead consolidated ahead of Thursday's US CPI release and the start of US Q4 earnings season on Friday," said Axel Rudolph, senior market analyst at IG. "Real estate, materials, industrials and utilities were the worst performing sectors amid ongoing sector rotation despite the US small business and economic optimism indices edging higher."

The National Federation of Independent Business' small business optimism index hit 91.9 in December, its highest reading in five months, compared to 90.6 in November and beating consensus expectations for a reading of 90.7. However, 23% of small business owners said inflation was still their single most important problem in operating their business, up one point from the prior month.

In other economic news, the US trade deficit unexpectedly fell by 2% to $63.2bn in November as imports slid, with the economy on track to register its smallest annual deficit in 2023 for three years. The forecast was for a rise to $65bn, from a revised $64.5bn the month before.

Comments from Federal Reserve governor Michelle Bowman were also in focus on Tuesday after she said the central bank's interest rate hikes were likely over with but also warned that she was not ready to begin trimming just yet. Bowman highlighted the Fed's progress on reining in inflation through tight policy and said: "Based on this progress, my view has evolved to consider the possibility that the rate of inflation could decline further with the policy rate held at the current level for some time."

Also drawing an amount of investor attention, US politicians struck a 2024 spending deal on Monday, seemingly avoiding a government shutdown and pulling the yield on the benchmark ten-year Treasury note back over the 4% line.

Juniper Networks and Match Group jump

Shares in Juniper Networks surged over 20% following a report that Hewlett Packard Enterprise is close to striking a $13bn deal to buy the network gear maker. According to The Wall Street Journal, HPE is in advanced talks with Juniper and a deal could be announced as early as this week. HP, however, saw shares drop nearly 9%.

Match Group shares rose strongly following a Wall Street Journal report that Elliott Investment Management has taken a significant stake in the online dating company thought to be worth $1bn. In a report late on Monday, the WSJ said activist investor Elliott intends to push for changes to boost its stock.

Microsoft edged higher despite the news that the European Commission announced it was looking into competition within virtual worlds and generative artificial intelligence. The EC said it was examining agreements made between major digital market players and generative AI developers/providers to gauge their impact on market dynamics, and added that a review was underway to assess whether Microsoft's investment in OpenAI complied with the EU Merger Regulation.

Dow Jones - Risers

Merck & Co. Inc. (MRK) $118.43 0.89%
Walmart Inc. (WMT) $159.31 0.67%
Procter & Gamble Co. (PG) $149.27 0.41%
Unitedhealth Group Inc. (UNH) $538.22 0.34%
Visa Inc. (V) $263.34 0.30%
Microsoft Corp. (MSFT) $375.79 0.29%
3M Co. (MMM) $109.06 0.22%
Salesforce.Com Inc. (CRM) $261.04 0.18%
Johnson & Johnson (JNJ) $161.66 0.06%
Caterpillar Inc. (CAT) $292.01 0.01%