4:16pm: Boeing drops on downgrade
The Dow closed Tuesday down 232 points, 0.6%, at 37, 361, the Nasdaq Composite fell 28 points, 0.2%, to 14,944 and the S&P 500 declined 18 points, 0.4%, to 4,766. The small-cap Russell 2000 index dipped 26 points, 1.3%, to 1,925.
Boeing shares tumbled another 7.9% after Wells Fargo downgraded the company to Equal Weight from Overweight, as concerns mount over its 737 Max 9 model planes.
Meanwhile, investors reacted negatively to comments from Federal Reserve Governor Christopher Waller, who said in a Washington DC speech Tuesday that rate hikes might not come as soon this year as many investors would hope.
The benchmark 10-year Treasury note yield rose about 12 basis points to 4.068%.
12:00pm: Stocks remain on the back foot
Stocks remained on the back foot as investors queried whether hopes for an interest rate cut in March could prove too optimistic,
At midday, the Dow Jones Industrial Average was down 205.73 points, 0.6%, at 37,387.25, the S&P 500 was down 19.63 points, 0.4%, at 4,764.20 and the Nasdaq Composite was down 51.37 points, 0.3%, at 14,921.39.
Meanwhile, a top Federal Reserve official has said the US central bank is within “striking distance” of returning inflation to rate-setters’ 2% goal.
Christopher Waller, a governor on the Fed’s board, said at a Brookings Institution event on Tuesday: “Based on economic activity and the cooling of the labour market, I am becoming more confident that we are within striking distance of achieving a sustainable level of 2 per cent PCE inflation.”
9:40am: Stocks dip and Morgan Stanley (NYSE:MS) heads south
Stocks fell back and the dollar gained as investors looked ahead to a busy week of speeches from central bank policymakers to see if hopes for a rate cut in March were supported.
Shortly after the opening bell, the Dow Jones Industrial Average was down 87.36 points, 0.2%, at 37,505.62, the S&P 500 was down 17.42, 0.4%, at 4,766.41 and the Nasdaq Composite was down 44.67 points, 0.3%, at 14,928.09.
Markets will be paying close attention to comments from the Federal Reserve’s Christopher Waller later on Tuesday.
Chris Turner, global head of markets at ING noted Waller delivered the "definitive and market-moving "something appears to be giving" speech in late November."
The speech provided an important lead indicator for the Fed's dovish turn at the December FOMC meeting, Turner pointed out.
"We presume today that he will stick to that same core message of successful disinflation and will not want to get involved in the fine-tuning of discussing a 2024 easing cycle, but not starting in March."
Morgan Stanley (NYSE:MS) fell 3.6% after reporting fourth quarter profit declined on one-off charges, in a mixed end to a year where it faced a "number of headwinds".
Goldman Sachs (NYSE:GS) was holding up better, little changed, after it reported consensus-topping fourth-quarter revenue, as its Asset & Wealth Management arm enjoyed a strong final three months of 2023.
7:00am: Stocks called lower ahead of big bank earnings
US markets are expected to open lower on Tuesday ahead of earnings from Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS), and as the country digested the prospect of Donald Trump running for President.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.5%, while those for the S&P 500 were down 0.5% and contracts for the Nasdaq 100 futures fell 0.7%.
Joshua Mahony at Scope Markets said: “US markets are increasingly going to have to prepare for the likely event of a second term for Donald Trump, with Iowa Republicans backing him heavily in a vote that saw Vivek Ramaswamy pull out and endorse Trump’s campaign.”
“Despite the efforts from the more moderate Nikki Haley, it looks increasingly likely to be a fresh showdown between Joe Biden and Donald Trump this year.”
Elsewhere, net income at Goldman Sachs (NYSE:GS) is expected to rise more than 10% from a year ago to $1.3 billion in the fourth quarter on a 2% increase in revenue, helped by a solid performance from its trading and investment banking arms.
Morgan Stanley (NYSE:MS)’s strategy will be in focus as new boss Ted Pick the first set of results under his tenure.
Net income is expected to have dropped 23% cent from a year ago to $1.6 billion in the fourth quarter.