US stocks ended lower on Tuesday - as Lucky 13 days failed to come for the hitherto record-breaking Dow - and never threatened to rise as investors bided time ahead of a key speech to Congress by President Donald Trump.
The Dow Jones Industrial Average had to make do with a fall of 0.1% to 20,812 as it failed to make it 13 successive record high closes.
Investors held their breath to see whether the president uses the spotlight to deliver the pro-business policy specifics they have been craving, or ignite controversial social issues that could divert political attention from the promised goals. Trump was due to speak on Capitol Hill at 2110 ET (0210 GMT Wednesday).
Meanwhile, comments by John Williams, president of the Federal Reserve Bank of San Francisco, helped push expectations of a March rate hike up to 56% from 52%, according to the Fed funds rate.
Williams said an interest-rate increase is “very much on the table for serious consideration” by the central bank at its upcoming meeting in March.
But the comments which are much priced-in failed to excite banking stocks or overall bourse tickers. Although that may change on Wednesday, after William Dudley, the influential head of the New York Federal Reserve, gave a late Tuesday CNN interview in which he commented that odds were on for a March hike. That sent the Fed funds rate expectations for a March hike up to 70%.
Earlier, the market bellwether S&P 500 closed down 0.3% at 2363. On the month, the main US equities barometer posted its best gains since March 2016 as US healthcare and financial stocks rose on factors like higher expected interest rates.
The S&P 500 rallied by 3.7% in February. The narrower Dow Jones Industrial Average whcih hit 12 successive records, tacked on 4.8%. Meanwhile, the Nasdaq Composite added 3.8 in February.
Healthcare shares led the way higher, with the S&P 500 sector jumping 6.3%. Financials also performed well, notching gains of 5%.
But S&P 500 declines on Tuesday were led by retailers.
The top S&P 500 faller was Signet Jewelers Ltd (NYSE:SIG) down 12.8% to $63.59 after the struggling jeweler issued a statement saying that a devastating Washington Post story alleging years of systemic, mass sexual harassment "create a distorted, negative image of the company."
The company, which owns leading jewelers Kay, Jared and Zales in the United States as well as Peoples in Canada and two British chains, saw shares fall thoughout the session.
Less controversial were the share price falls at retailer Target (NYSE:TGT), the second-biggest decliner on the S&P 500, dropping by 12.2% to $58.77 after presenting a dismal 2017 outlook.
Speaking at the company’s AGM, Apple Inc (NASDAQ:AAPL) CEO Tim Cook signalled that Apple would look to expand its US manufacturing and supplier base, as the iPhone maker faces looming pressure on domestic job creation from the Trump administration.
Apple would also step in to defend net neutrality, its chief executive said, if the principle protecting even-handed management of internet traffic is threatened by the new head of the Federal Communications Commission, the US telecom regulator.
Apple shares closed flat at $136.99.
Meanwhile, an outage in Amazon Web Services caused widespread failures for key US websites on Tuesday, including the US Securities and Exchange Commission and travel site Expedia.com (NASDAQ:EXPE).
In a brief statement posted just before 1100 PT, Amazon said that some customers “will continue to experience high error rates” and that it was working to resolve the issue.
The embarrassing episode is made worse by the fact that Amazon (NASDAQ:AMZN) is trying to gear up to exploit the commercial advantages of diversifying into cloud business. Amazon shares ended down 0.4% at $845.04.
The S&P Midcap 400 closed down a sharp 1.1% at 1729 and the S&P Smallcap 600 down a hefty 1.6% at 846.
Early trading
US equities were lower in early Tuesday trading as investors digested a batch of US economic data ahead of US President Donald Trump’s first address to Congress.
The US economy in 2016 grew by 1.9% in the second quarter, which was weaker than expected at 2.1%, according to a revised report. Meanwhile US home-price growth accelerated in December to its swiftest pace since January 2016.
The S&P 500 fell 0.1% to 2,367, while the Nasdaq Composite declined 0.3% to 5,845. The Dow Jones Industrial Average, which notched its 12th straight record closing high on Monday, was flat at 20,833.
The moves came ahead of Trump’s first address to Congress in a speech usually given by presidents to provide legislators policy proposals and agenda details.
Retailer Target (NYSE:TGT) was the biggest decliner on the S&P 500, dropping by 11.7% at $59.10 after a dismal 2017 outlook while the S&P Midcap 400 declined by 0.5% to 1739 and led by Tenet Healthcare Corp (NYSE:THC), down 12.4% to $19.86 after reporting fourth-quarter 2016 operating earnings of 6 cents per share that missed the Zacks Consensus Estimate of 20 cents by 70%. Also, the bottom line deteriorated 62.5% year over year due to lower revenue generation.
The S&P Smallcap 600 was down 0.7% at 853 and led by Essendant Inc (NASDAQ:ESND) down 28.3% to $15.84 updated its first quarter earnings guidance. The company provided EPS guidance of minus $0.02 for the period, compared with the Thomson Reuters consensus EPS estimate of $0.25.
Pre-Open
US shares are indicating a soft start but so small is the move that they could head for a fresh record high on Tuesday. Much depends on what US President Donald Trump will say to Congress this session after weaker GDP data and a weak outlook from retailer Target (NYSE:TGT).
But whether it becomes a Lucky 13 days of record highs for the Dow Jones Industrial Average remains to be seen after the second quarter second estimate for US gross domestic product landed at 1.9% q/q. It had been forecast to be 2.1% and was well down from the 3.5% recorded in the first quarter.
“It was expected, yet still seen as disappointing, after the US GDP dropped 0.1%, and the figures are suggesting the world’s largest economy is continuing to lose momentum,” said Paul Sirani, Chief Market Analyst at Xtrade.
“With President Trump delivering his first major speech on Tuesday, although not officially a State of the Union address, it could have huge ramifications for the financial markets.
“That being said, Trump’s initial promise to boost US GDP to at least 4% still looks likely to come to fruition despite the uncertainty of his first few months in the White House.”
But the risk is that a slowing economy, far from stimulating even greater economic activity injections, may result in even more draconian measures to protect the economy from foreign trade.
The S&P 500 market bellwether is set to fall by 0.1%, the Dow Jones Industrial Average by just 0.02% and the Nasdaq Composite could open flat.
US stocks pinned a 12th record high close on Monday, as the Dow was sent north by energy stocks, growing expectations of a March rate hike and hopes for more details from President Donald Trump about his tax and regulation plans.
On Monday, both the Dow and S&P 500 chalked record high closes after also marking intraday record highs. Only the Nasdaq was unable to match that.
In stock news, shares in Target tumbled by more than 14% in pre-market trading on Tuesday after the department store operator issued fourth-quarter earnings that came in at the low end of already reduced estimates and warned that full-year earnings for 2017 could slump by as much as 24% compared to 2016.
The retailer, which issued a profit warning last month following a dismal holiday performance, said it continues to struggle to get customers back into its stores, in the latest sign of the malaise that has engulfed the wider US retail sector anxious about the risks of a border tax.
As a result, Target said it expects like-for-like sales to drop by low-single digits for the 2017 fiscal year and is forecasting annual adjusted earnings to come in at between $3.80 to $4.20, down from the $5.01 it recorded in 2016.
Target shares were down 13.1% at $58.18 pre-market.
Meanwhile, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) was down 6% at $15.71 pre-market after the besieged Canadian drugmaker, said sales fell 7% in 2016 following a sharp decline in existing product sales and a hit from unfavourable currency moves.