4:10pm: Fed rate cut expectations loom
Wall Street closed lower on Tuesday as investors awaited the Federal Reserve's decision on interest rates.
The Dow Jones fell 0.6%, to close at 43,450, marking its ninth consecutive day of losses and its longest losing streak since 1978.
The S&P 500 declined 0.4% to end the session at 6,051. Meanwhile, the tech-heavy Nasdaq dropped 0.3% to finish at 20,109, retreating from its record high set in the previous session.
The market's downturn came as traders braced for the Federal Reserve's two-day policy meeting, which began today. Investors widely expect the central bank to cut interest rates by 25 basis points, bringing the federal funds rate to a range of 4.25-4.50%.
Notable movers included Tesla (TSLA), which continued its post-election rally, rising 2.5% in early trading. Conversely, large-cap technology stocks such as Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), and Meta Platforms (META) lost ground.
3:40pm: Honda and Nissan deny merger talks
Japanese automakers Honda Motor (NYSE:HMC) (Honda Motor (NYSE:HMC)) and Nissan Motor Co are reportedly set to begin merger negotiations to tackle mounting competition from global electric vehicle (EV) leaders like Tesla and China’s BYD, the Nikkei reported on Tuesday.
The merger would establish a single holding company and could include Mitsubishi Motors, in which Nissan holds a 24% stake, creating one of the world’s largest auto groups. Combined, Honda and Nissan sold 7.4 million vehicles globally in 2023.
In identical statements, both firms denied a formal merger announcement but confirmed they are exploring future collaboration.
2:30pm: American consumer in good shape
The Fed is expected to emphasize positioning rates in "neutral" territory, aiming for stable employment and 2% inflation while avoiding direct commentary on Trump’s potential policy agenda, but in 2026, Trump could influence monetary policy if he appoints a new, more aligned Fed chair.
So says Comerica's Bill Adams, in response to the retail sales data released earlier today.
"The American consumer is in pretty good shape. Most people who want a job have one, incomes are outpacing inflation, and household wealth is rising rapidly," Adams commented.
"These are big fundamental supports to consumer's willingness to spend.
"In particular, homeowners who locked in low mortgage payments before house prices and interest rates surged after 2022 have been insulated from a lot of the inflation of recent years, and that translates into more discretionary spending power.
"There’s not much the Trump administration will be able to do to force the Fed to loosen rates faster in the near term, but that could change in 2026 if President-elect Trump gets the Senate to confirm a new Fed chair who is more sympathetic to his policy goals."
12:35pm: Stocks lower
Markets were trading lower at midday as investors await the outcome of the Federal Reserve's two-day policy meeting.
The Dow Jones is down 0.6% at 43,458, extending its losing streak to eight consecutive sessions. The S&P 500 has declined 0.4% to 6,052, while the tech-heavy Nasdaq is off 0.3% at 20,124, retreating from its record high achieved on Monday.
The market's cautious tone comes despite encouraging retail sales data, which showed a 0.7% increase in November, surpassing expectations. Investors are closely monitoring the Federal Reserve's final meeting of the year, with widespread anticipation of a 0.25% interest rate cut to be announced on Wednesday.
Tech stocks, which have been driving recent market gains, are showing signs of cooling off. Nvidia, a key player in the semiconductor industry, has seen its stock price decline by more than 2% in late morning trading. Meanwhile, cryptocurrency-related stocks are experiencing slight gains as Bitcoin briefly surpassed $108,000 per token.
11:55am: Canadian inflation eases
Canada’s annual inflation rate came in at 1.9% for November down from 2% in October, Statistics Canada said on Tuesday.
The slowdown in price growth in November was broad-based, with travel tours and mortgage interest costs contributing the most.
Excluding gasoline, the consumer price index (CPI) increased by 2%.
Grocery prices rose 2.6% from the previous year, down slightly from 2.7% in October but marking a 19.6% increase since November 2021.
Shelter costs also remain high, increasing by 18.9% compared to November 2021.
On a monthly basis, the CPI remained unchanged, but seasonally adjusted data showed a 0.1% increase.
10:58am: Bubble in US markets?
Some marketwatchers are worried about the possibility that there might be a bubble in the US markets.
Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank is one of those concerned.
"The S&P 500 hasn’t deviated from its long-term trend this widely since the dot-com bubble," Ozkardeskaya wrote Tuesday.
"But a bubble is not a bubble until it bursts. For now, Trump and Powell are giving investors all the support and the money in the world to stick with their positions."
9.48am: Stocks drop as trading gets underway
Wall Street got off to a poor start on Tuesday as traders weighed expectation-beating retail sales figures ahead of Wednesday’s Federal Reserve interest rate call.
The Nasdaq and S&P 500 both dropped by 0.5% after the opening bell, while the Dow Jones slipped by 0.4%.
Figures earlier on showed retail sales outdid expectations in November, growing by 0.7% and adding to evidence around the health of the US economy.
Though expectations remained for a 25 basis point interest rate cut by the Fed on Wednesday, markets had been looking to policymakers’ outlook, with the beat likely to support views for less aggressive rate cuts over the coming year.
Wall Street’s drop on Tuesday also coincided with a dip in Nvidia Corp shares, which fell 3.6% early on after reports emerged of delays around its latest Thor chip.
Chinese electric vehicle maker XPeng was reportedly among firms to have been deterred by the delays and seeking alternatives for new cars as a result.
Elsewhere, Pfizer Inc (NYSE:PFE, ETR:PFE) was among the early risers after settling investor nerves with in-line guidance for 2025.
8.44am: Car purchases fuel expectation-beating US retail sales
Sales across the US retail sector surpassed expectations in November, US Census Bureau figures revealed on Tuesday.
Sales climbed by 0.7% month on month to reach $724.6 billion, against market expectations for a 0.5% uptick.
Excluding auto purchases, sales ticked up by 0.2% for a second consecutive month, signalling a surge in car purchases but dampened growth elsewhere.
Sales ticked up by 3.8% as expected on an annual basis, the figures also showed.
7.03am: Stocks seen lower
Caution looked to sweep across Wall Street ahead of Tuesday’s trading as this week’s Federal Reserve interest rate call drew closer.
Futures had the Dow Jones down 0.4% before the opening bell, while the S&P 500 and Nasdaq were seen 0.3% and 0.1% lower respectively.
Attention this week has been on Wednesday’s interest rate decision by the Fed, with markets widely anticipating a 25 basis point cut.
Retail sales figures for November on Tuesday could provide some colour as to consumer spending ahead of the rate call though, interactive investor analyst Richard Hunter noted.
Expectations are for a 0.5% increase over the month, against October’s 0.4% uptick, with sales seen 3.8% higher on an annual basis.
On Wednesday’s rate decision, Hunter added: “The near certainty of a cut has seen speculation moving on to the accompanying comments, where the Fed’s outlook next year could be market moving.
“Previously, four small cuts had been expected, but the residue of a strong economy and some potentially inflationary actions by the new administration could lead to the central bank sitting on its hands as it surveys the new economic scene.”