Dow closes lower for a second day as late-2023 rally sputters: Live updates

The Dow ended Tuesday's session lower.

The blue-chip average closed down around 0.2%, while the S&P 500 was near flat. The Nasdaq Composite outperformed, climbing about 0.3%.

— Alex Harring

Traders are wrong to expect the Federal Reserve to aggressively cut rates in 2024, according to Wei Li, the global chief investment strategist at BlackRock

"Currently, market pricing for how early the first cut is, as well as how many cuts there will be next year, is a bit overdone in our view," Li said at a roundtable event on Tuesday.

As of Tuesday morning, the options market implies an expectation of a rate cut in March and five total rate cuts in 2024, according to the CME FedWatch Tool.

"That is really aggressive. Something would have to go seriously wrong for that to come through," Li said.

Still, BlackRock does expect at least one rate cut in the second half of next year, Li said.

— Jesse Pound

Ned Davis Research set a 2024 S&P 500 target at 4,900, saying stocks will continue their march upward after the Federal Reserve achieves its soft landing.

"A soft landing should permit the cyclical bull market to continue," the firm's chief U.S. strategist Ed Clissold wrote in Wednesday note. "Our year-end S&P 500 target is 4900, about 7% above current levels."

Other Wall Street strategist have trotted out their 2024 year-end targets. Bank of America's Savita Subramanian expects the broader index will end 2024 at 5,000, while Goldman Sachs sees a rise to 4,700.

Clissold anticipates a volatile first half followed by a better second half as investors move past recession fears, at which point he expects cyclicals and small-caps could get a boost.

— Sarah Min

A gain in shares of Apple helped pare losses for the Dow in Tuesday's session, underscoring the climb in technology names.

The blue-chip average slipped about 0.2%, dragged on by slides of more than 2% in Goldman Sachs and 3% in Procter & Gamble. But a jump of nearly 2% in Apple — the best performer in the Dow — helped mitigate losses for the 30-stock index.

The move comes as technology as a whole has outperformed on Tuesday. In fact, the tech-heavy Nasdaq Composite is the sole major index poised for gains, as of 3:30 p.m. ET.

In a similar vein, information technology and communication services — which are both known for their exposure to tech — were two of just three sectors of the 11 in the S&P 500 on track to end the session higher. (Consumer discretionary was the other sector slated to close positively.)

Beyond Apple, the Dow was buoyed by advances of more than 1% in Verizon and Merck.

— Alex Harring

Retail investors have access to a new highly leveraged way to bet on the S&P 500.

Bank of Montreal's Max SPX 500 4x leveraged ETNs began trading on Tuesday under the ticker "XXXX." The ETN is the highest leveraged exchange traded product in the U.S., according to CFRA.

The ETN comes with several risks, including its design for short-term trading, potential for large and rapid losses, and the credit risk inherit in an exchange traded note structure.

The ETN has seen about 47,000 notes traded so far today, according to FactSet.

— Jesse Pound

Oil prices fell again on Tuesday despite efforts by OPEC+ to convince traders that the production cuts agreed last week will come through.

The West Texas Intermediate contract for January fell 72 cents, or .99%, to settle at $72.32 a barrel, while the Brent crude contract for February fell 83 cents, or 1.06%, to settle at $77.20 a barrel.

Traders have been skeptical that the OPEC+ will deliver on promised supply cuts.

Russian Deputy Prime Minister Alexander Novak said OPEC+ was prepared to deepen supply cuts in the first quarter of 2024 if necessary, according to Russian news agency TASS.

Saudi Energy Minister Price Abdulaziz bin Salman told Bloomberg Monday that the group would deliver on the 2.2 million bpd of promised cuts and could extend them beyond the first quarter if necessary.

— Spencer Kimball

The three major indexes hovered near their flatlines as the last hour of Tuesday's session commenced.

The Dow slipped 0.2%, while the S&P 500 sat just under the flatline shortly after 3 p.m. ET. The Nasdaq Composite was the outperformer with a gain of nearly 0.3%.

— Alex Harring

Holiday shoppers have been busy filling up virtual carts online, but Goldman Sachs' Spencer Hill doesn't think that activity will be strong enough to make up for the weakness at brick-and-mortar stores.

Hill cited Adobe data, which shows a 7.3% jump in online spending from Nov. 1-27 compared with the year-ago period, for his stance. While that sounds like solid growth, it's not enough to close the gap based on the declines seen in Fiserv credit card data and in the Redbook department store panel, according to Hill. He expects Census retail sales to show a 0.1% decline in both November and December, excluding auto, gas, and building materials.

Another headwind has been falling prices at the store. Promotions started earlier this holiday season, and have been particularly steep for apparel, he said.

—Christina Cheddar Berk

The recent dramatic pullback in the 10-year Treasury yield should be as carefully looked at as it was during its rapid rise, according to Quincy Krosby, chief global strategist for LPL Financial.

Krosby believes that the fast decline in yields could be a sign that economic growth is "deteriorating" faster than desired.

"A faster pace downward should similarly be acknowledged by what it implies---that a growth scare has taken hold," said Krosby.

 "The characterization of the economy symbolizing the Fed's success at engineering a soft-landing has to be questioned in light of the most recent Q4  economic forecasts, with prospects now edging rapidly below 2%. This is blatantly a rapid detour from Q3's 5.2% GDP print," Krosby added.

— Hakyung Kim

Shares of telecommunications giant Charter Communications dropped more than 7% on Tuesday after an executive warned of a surprisingly soft trend in internet demand.

CFO Jessica Fischer said at UBS Global TMT Conference said that "it's likely that we could end up with negative internet net adds inside of Q4," according to FactSet.

While telecom companies have been struggling for years with customers cutting the cord for cable, internet has mostly remained a growth area.

Shares of Charter competitor Comcast were down more than 3%.

— Jesse Pound

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

Energy and materials led sector losses on Tuesday. Both groups fell by around 1%, while the S&P 500 declined just 0.1%.

Sealed Air and Albemarle both fell by more than 5% and 6%, respectively, leading the materials sector's losses.

In the energy sector, Baker Hughes and Halliburton were both down by more than 2%, making them the biggest decliners in the sector.

— Hakyung Kim

Alaska Air Group climbed more than 4% in Tuesday's session, regaining some ground after Monday's selloff.

Shares rose 4.1% in Tuesday's session. The stock tumbled 14.22% on Monday, marking its worst day since March 18, 2020, when shares dropped 22.75%.

Investors sold the stock following the airline's announcement that it would buy rival Hawaiian Airlines in a $1.9 billion deal.

Alaska was the one of just two stocks in the Dow Jones Transportation Average trading higher on Tuesday.

— Alex Harring

These are some of the companies making headlines in midday trading:

• Apple — The iPhone maker's shares added 2% in midday trading after SensorTower data showed App store revenue jumped 11% quarter-to-date for the fiscal first quarter of 2024, according to a note from Bank of America. The firm also noted an 8% increase in App store revenue in China.
• Nio — The Chinese automaker climbed about 3% after reporting a smaller-than-expected loss in the third quarter. Losses came in at 2.67 yuan per share, compared to the 2.91 yuan loss expected by analysts, according to LSEG. Nio has taken steps to bring down costs recently, including a 10% cut to its workforce last month.
• CVS Health — Shares gained 4% after CVS said it would overhaul the way it prices prescription drugs. The pharmacy chain also issued higher-than-expected revenue guidance in 2024. The company now expects revenue of at least $366 billion, while analysts polled by FactSet forecast $344.5 billion. CVS also plans to raise its quarterly dividend by nearly 10%.

Read the full list here.

— Brian Evans

If history is any guide, don't be surprised if December proves to be one of the strongest months of 2023, according to Bank of America.

Since 1936, the broad-based index has posted positive returns 78% of the time in December, gaining 2.2% on average.

Even during years with a strong November, the index rose two thirds of the time, gaining 1.1% on average and slightly more than the average month. The Wall Street firm also sees a positive setup for the new year.

"The S&P 500 is right near our 2023 year-end target of 4600, and we still see more tailwinds than headwinds into 2024 and target 5000 by year-end 2024," wrote Savita Subramanian, head of U.S. equity and quantitative strategy.

— Samantha Subin

Eli Lilly said its recently approved Zepbound obesity drug is available at U.S. pharmacies. The drug has already been added to coverage by Express Scripts and Cigna Health. Starting on Dec. 15, covered patients will pay $25 a month for a one- or three-month supply. Other patients who have commercial health insurance may be eligible to pay $550 per month, Lilly said.

"Express Scripts' and Cigna's expansion of access to Zepbound are likely just the first dominos to fall in the US for weight loss indication coverage. Both the $25/month and $550/month options listed above represent 50%-or-greater discounts to the list price and may drive further therapeutics uptake," Stifel said in a research note.

Right now, demand for these drugs is greater than either company can satisfy. Given this situation, both companies will likely sell as much of these drugs as they can produce. Still, Zepbound offers a very compelling combination for consumers with obesity: clinical trials showed superior weight loss and its list price is lower than Novo Nordisk's Wegovy.

While both drug companies have seen enormous gains in 2023, shares of Lilly and Novo were weaker in trading Tuesday morning.

—Christina Cheddar Berk

Nio climbed more than 4% as investors cheered narrowing losses for the electric vehicle maker during the third quarter.

The Chinese company posted a loss of 2.67 yuan per share, smaller than the 2.91-yuan drop expected by analysts surveyed by LSEG. It also marked a decrease from the second-quarter loss of 3.7 yuan per share.

That overshadowed revenue, which came in below analysts' consensus forecast in the third quarter. Guidance on the key financial measure was also soft.

— Alex Harring, Arjun Kharpal

The technology-heavy Nasdaq Composite outperformed in morning trading, marking a reversal from Monday.

The index rose 0.6%. By comparison, the broad S&P 500 was hovering near flat and the blue-chip Dow slipped 0.2%.

That's a turn from Monday's session, when the Nasdaq posted the biggest loss of the three indexes.

— Alex Harring

The Russell 2000 declined 1% on Tuesday, reversing course after posting notable gains in the prior session.

The small cap index was a notable outperformer on Monday, when it advanced 1% despite losses across the broader market.

Year to date, the Russell 2000 is up by more than 5%, reversing a slide into negative territory in early October. Still, it is underperforming the broader market.

— Hakyung Kim

October job openings slid to the lowest level since 2021, according to Labor Department data released Tuesday.

The Job Openings and Labor Turnover Survey showed 8.7 million roles in October, below economists' consensus forecast of 9.4 million, according to Dow Jones. It also marked the fewest openings since March 2021.

That data is welcome news for investors hoping for evidence that prior interest rate hikes have had the Federal Reserve's intended impact on the economy. Stocks took a leg up following the data, but the Dow still remained more than 100 points down.

— Alex Harring, Jeff Cox

The three major indexes kicked off Tuesday's session down.

The Dow and S&P 500 traded about 0.2% and 0.3% lower, respectively, shortly after 9:30 a.m. ET. The Nasdaq Composite slid about 0.4%.

Tuesday's open follows a losing session on Monday for the three major averages.

— Alex Harring

Investors will have to pare back their expectations for December after a strong November rally, UBS said.

Stocks notched five straight weeks of gains on Friday, with the S&P 500 registering a fresh high for the year. But UBS' Mark Haefele expects markets may now be pricing in "too much good news on monetary policy," and may not benefit from falling Treasury yields the same as it had in November. In fact, his 4,700 year-end S&P 500 forecast spells a 2% rise for the broader index.

"After such a strong rally in November, we think the potential size of US stock gains ahead look more modest—we forecast the S&P will end next year at around 4,700," Haefele wrote on Tuesday.

— Sarah Min

These are some of the stocks making notable moves before the bell:

• GitLab — GitLab shares popped more than 14% after the maker of developer tool software posted stronger-than-expected fiscal first-quarter results and shared upbeat guidance. The company posted its first adjusted operating profit and said revenue grew 32% year over year.
• Take-Two Interactive — The video game publisher's stock fell more than 4% before the bell. Subsidiary Rockstar Games released the trailer for the new iteration of its Grand Theft Auto game, which is slated for 2025, earlier than expected following a leak on social media platform X.
• CVS Health —The pharmacy stock added more than 1% in premarket trading after the company provided higher-than-expected revenue guidance for 2024.

See the full list of stocks moving here.

— Samantha Subin

While the major indexes posted losses on Monday, one group was able to sidestep the downtrend: small-cap stocks.

The Dow, S&P 500 and Nasdaq Composite all finished Monday lower, marking a turn after notching five straight winning weeks. But the small-cap focused Russell 2000 broke from the trend, finishing Monday's session more than 1% higher.

It can be seen as a reprieve for smaller names, with the Russell 2000 underperforming the three major averages over the course of 2023.

— Alex Harring

Lands' End tumbled 9% before the bell after the retail posted a quarterly earnings report that showed weakness compared with a year prior.

The retailer said it lost 11 cents per share in the third quarter excluding items, a wider loss than the 5-cent drop recorded in the same three-month period in 2022. Revenue was down about 12% from the same quarter a year ago.

Investors also analyzed current-quarter and full-year guidance offered by the company.

— Alex Harring

Food maker J. M. Smucker gyrated in Tuesday premarket trading after cooling expectations for its full-year financial performance.

J. M. Smucker slashed the top end of its comparable net sales guidance, while also pulling back its forecast for adjusted earnings per share and free cash flow. Meanwhile, the company also said capital expenditures would be likely higher than previously expected for the full year.

Elsewhere, second-quarter earnings per share came in higher than anticipated by analysts polled by LSEG, formerly known as Refinitiv. Investors have watched J.M. Smucker since its September announcement that it would buy Twinkies maker Hostess Brands for $5.6 billion.

— Alex Harring

Moody's lowered its outlook on China to negative from stable as debt levels across the country continue to rise, and Beijing moves to support the economy through fiscal stimulus measures.

"The outlook change also reflects the increased risks related to structurally and persistently lower
medium-term economic growth and the ongoing downsizing of the property sector," Moody's said in a statement.

The iShares MSCI China ETF (MCHI) fell nearly 2% in the premarket.

— Fred Imbert

Goldman Sachs' Scott Rubner noted that the market is now in the process of unwinding some of the long positions taken in the last month that lifted the S&P 500 to its highest levels of the year last week.

"The flow-of-funds dynamics that caused the everything rally in November have absolutely run out of gas right now," Rubner wrote in a note titled "GS Tactical Flow-of-Funds: December - unwind of the unwind."

"CTA asymmetric skew is firmly to the down side after buying +$225 Billion in the last 1-month and now long $92 Billion. We have +$58B to buy in a up big tape vs. -$210B to sell in a down big tape," he said. "This is the fastest increase in exposure that we have ever seen."

The S&P 500 rallied 8.9% in November for its biggest monthly gain since July 2022.

— Fred Imbert

Stockholm-listed shares of Sweden's Ericsson were 8.5% higher at 8:30 a.m. London time after telecom juggernaut AT&T announced it would partner with the firm on its deployment of an open radio access network (Open RAN) in the U.S.

AT&T spend could near $14 billion over a five-year contract with Ericsson, the companies said Monday.

Ericsson will manufacture 5G equipment for the project at its factory in Lewisville, Texas.

Finland's Nokia dropped 7.35% to its lowest level since November 2020, as it loses more of its share of AT&T supplier work to Ericsson.

Open RAN or ORAN networks represent a shift to telecom firms using cloud-based software and equipment from several suppliers, potentially cutting costs, rather than using proprietary equipment largely from one company.

— Jenni Reid

U.K. households delayed Christmas spending in November, leading to damp retail sales, according to the British Retail Consortium.

The trade group found sales rose 2.7% in November, slightly above the 2.6% average over the last three months but down from 4.2% growth in November 2022. It noted its figures are not adjusted for inflation and so likely represent a fall in overall volumes.

Food sales were 7.6% higher across the three months to November, while non-food sales dipped 1.6%.

"Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November. While this had the desired effect initially, the momentum failed to hold throughout the month," said Helen Dickinson, chief executive of the BRC.

Retailers will look to offer customers affordability in December to boost spending, Dickinson said, while in 2024 they will face fresh cost pressures from higher business rates and an increase to the minimum wage.

The cost-of-living crisis continues to test consumer resilience, said Paul Martin, U.K. head of retail at KPMG.

"With two of the three months of the crucial golden quarter seeing sales growth below 3%, it has already been a weak Christmas trading period. Any excess stock not sold before Christmas could be further reduced leading to big January sales, and potentially having an even greater impact on already tight margins," Martin said.

— Jenni Reid

The Caixin China services purchasing managers' index for November climbed to its highest in three months, diverging from China's official PMI reading that showed a contraction.

This private survey reading came in at 51.5 in November, according to a release dated Dec. 5, rising from 50.4 in October and 50.2 in September.

China's official non-manufacturing PMI services sub-index for November released last week came in at 49.3, showing a contraction for the first time since December 2022 .

— Clement Tan

The headline inflation rate in Japan's capital city of Tokyo rose by 2.6% in November, its slowest rise since July 2022.

This comes after the capital city's inflation rate spiked to 3.3% in October, after being largely on a downward trend from its peak in January. Tokyo's inflation readings are largely considered to be a leading indicator of nationwide trends.

Core inflation, which strips out prices of fresh food, came in at 2.3%, lower than Reuters expectations of 2.4% and also down from 2.7% in October.

The so called "core-core" inflation rate, which strips out both fresh food and fuel prices and watched by the Bank of Japan fell slightly to 3.6%, down from 3.8% in October.

— Lim Hui Jie

Australia's central bank held its benchmark policy rate at 4.35% in its December meeting, in line with expectations from economists polled by Reuters.

In its release, the Reserve Bank of Australia explained that the "limited information" on the domestic economy that has come in since its November meeting has been in line with expectations.

The bank noted that October's CPI reading showed inflation has moderated, but did not provide much more information on services inflation.

The RBA also highlighted that while there have been encouraging signs on goods inflation abroad, services price inflation has remained persistent, and the same could occur in Australia.

— Lim Hui Jie

November's rally, which saw heathy returns for stocks and price appreciation for bonds, spurred investors to snap up exchange traded funds, according to State Street.

Investors poured $94 billion into ETFs overall last month, placing them $40 billion away from reaching $500 billion in flows for the year, the firm found.

Bond ETFs saw inflows to the tune of $27 billion, but high-yield bond ETFs scooped up $11 billion for their best month ever, State Street said. This time, ultra-short government bond ETFs – a favorite of investors this year amid high interest rates and an inverted yield curve – posted outflows of $7.1 billion as yields tumbled in November.

"There was a defined shift in sentiment and risk was expressed in bonds, in addition to equities," Matthew Bartolini, head of SPDR Americas Research, State Street Global Advisors said.

-Darla Mercado

Small caps are likely on pace to continue their recent outperformance heading into 2024, said Olivier d'Assier, head of applied research, APAC at Axioma.

"This year, caution took the form of betting on large, well-capitalized, profitable, value stocks that benefited from a strong USD," said d'Assier.

As macro uncertainty over the rise in interest rates has come down, "high-for-not-much-longer" is the new market consensus, d'Assier added. This shift will benefit small cap growth stocks, he noted.

"In 2024, as investors play the rebound in the economic cycle, they will favor small cap growth stocks and companies benefitting from a weaker USD," he continued.

— Hakyung Kim

Gitlab shares rallied more than 16% Monday post market after posting better-than-expected fiscal third quarter results. The software company also posted its first-ever adjusted operating profit.

Meanwhile, disposable medical devices company Merit Medical Systems fell 4.1% after announcing a proposed sale of $550 million convertible note in a private placement.

— Hakyung Kim

U.S. stock futures opened slightly below the flatline on Monday night.

Dow Jones Industrial Average futures fell 31 points, or 0.1%.

Futures tied to the S&P 500 and Nasdaq Composite also slipped 0.1%.

— Hakyung Kim