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Dow May Regain Ground After Longest Losing Streak Since 1978
US Market
The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to move back to the upside after ending the previous session mostly lower.
Traders may look to pick up stocks at somewhat reduced levels following yesterday’s weakness, which saw the Dow close lower for the ninth consecutive session.
The blue chip index matched its longest losing streak since 1978, slumping to its lowest closing level in almost a month.
Early trading activity is likely to be somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy announcement this afternoon.
The Fed is widely expected to continue lowering interest rates, with CME Group’s FedWatch Tool currently indicating a 98.8 percent chance of another quarter point rate cut.
Traders are subsequently likely to pay closer attention to the accompanying statement as well as officials’ latest economic projections, including their forecasts for rates.
Recent data showing inflation remains sticky has led to some worries the Fed will lower rates slower than previously anticipated next year.
After coming under pressure early in the session, stocks saw continued weakness throughout the trading day on Tuesday. The tech-heavy Nasdaq pulled back off Monday’s record closing high, while the Dow closed lower for the ninth straight session for the first time since 1978.
The major averages climbed off their worst levels going into the close but remained in the red. The Dow slid 267.58 points or 0.6 percent to 43,449.90, the Nasdaq dipped 64.83 points or 0.3 percent to 20,109.06 and the S&P 500 fell 23.47 points or 0.4 percent to 6,050.61.
The weakness on Wall Street partly reflected a pullback by technology stocks, which helped lead the way higher in the previous session.
Networking stocks showed a significant pullback, with the NYSE Arca Networking Index tumbling by 2.2 percent after surging to a record closing high on Monday.
Considerable weakness is also visible among semiconductor stocks, as reflected by the 1.6 percent loss posted by the Philadelphia Semiconductor Index.
Shares of Broadcom (NASDAQ:AVGO) gave back ground following a recent spike, while shares of Nvidia (NASDAQ:NVDA) saw further downside after entering contraction territory on Monday.
Outside the tech sector, financial stocks saw notable weakness, dragging both the NYSE Arca Broker/Dealer Index and the KBW Bank Index down by 1.5 percent.
Telecom, housing and steel stocks also moved to the downside, while pharmaceutical stocks bucked the downtrend amid a surge by shares of Pfizer (NYSE:PFE). Pfizer shot up by 4.7 percent after forecasting 2025 revenues in line with estimates.
Meanwhile, traders continued to look ahead to the Federal Reserve’s highly anticipated monetary policy announcement on Wednesday.
Potentially adding to the concerns about the outlook for rates, the Commerce Department released a report showing stronger than expected retail sales growth in the month of November.
“This report will likely add to the Fed’s debate about the policy path for 2025,” said Jeffrey Roach, Chief Economist for LPL Financial. “Unless the labor market materially weakens, investors should expect the Fed to ease rates next year but not as much as originally hoped.”
U.S. Economic News
While the Commerce Department released a report on Wednesday unexpectedly showing a continued slump by housing starts in the U.S. in the month of November, the report also showed a much bigger than expected surge by building permits.
The report said housing starts tumbled by 1.8 percent to an annual rate of 1.289 million in November after plunging by 3.2 percent to a revised rate of 1.312 million in October.
Economists had expected housing starts to jump by 2.2 percent to an annual rate of 1.340 million from the 1,311 million originally reported for the previous month.
Meanwhile, the Commerce Department said building permits spiked by 6.1 percent to an annual rate of 1.505 million in November after falling by 0.4 percent to a revised rate of 1.419 million in October.
Building permits, an indicator of future housing demand, were expected to climb by 1.0 percent to a rate of 1.430 million from the 1.416 million originally reported for the previous month.
At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended December 13th. Crude oil inventories are expected to decrease by 1.7 million barrels after falling by 1.4 million barrels in the previous week.
The Federal Reserve is due to announce its monetary policy decision at 2 pm ET, followed by Fed Chair Jerome Powell’s post-meeting press conference at 2:30 pm ET.
Europe
European stocks have moved modeslty higher on Wednesday ahead of upcoming Federal Reserve and Bank of England meetings.
Markets have priced in a 25 basis point rate cut from the Federal Reserve later in the day.
Investors will closely scrutinize the Fed’s updated economic projections and dot plot for insights into the pace and extent of potential rate cuts throughout 2025.
The British pound held steady despite new data showing that U.K. inflation rose to an eight-month high in November.
The consumer price index posted an annual growth of 2.6 percent in November, up from 2.3 percent in October.
Core inflation, excluding prices of energy, food, alcohol and tobacco, advanced to 3.5 percent from 3.3 percent.
The data supported expectations that the Bank of England will hold interest rates unchanged at its final meeting of the year on Thursday.
While the German DAX Index is up by 0.2 percent, the French CAC 40 Index is up by 0.1 percent and the U.K.’s FTSE 100 Index is just above the unchanged line.
ASSA ABLOY, a provider of access solutions, has moved to the upside after it acquired Norshield Security Products in the U.S.
Kingfisher, a British home improvement company, has also risen after selling its Brico Depot Romania business to Altex Romania for €70m.
Character Group, a toys, games, and giftware company, has also rallied after posting year-end results in line with expectations.
Hardide, a provider of tungsten carbide coatings to engineering components, has also jumped after it secured a 10-year deal for coating aerospace cargo door components.
French automaker Renault, which owns around 23 percent of Japan’s Nissan, has also surged after reports emerged that Honda and Nissan have initiated talks on a possible merger.
Kontron AG shares have also soared. The German provider of technology products and services said that it has received an order of around 165 million euros from a European defense company.
Asia
Asian stocks ended mixed in cautious trading on Wednesday as investors waited to see what comes of the Federal Reserve meeting later in the day.
A 25 basis point rate cut is likely, while the release of the Summary of Economic Projections and a press conference by Fed Chair Jerome Powell could signal changes in the size and pace of projected future rate cuts.
Analysts foresee a hawkish shift in the dot plot, consistent with the movement in market expectations since the last update in September.
The U.S. dollar held steady against its major peers in Asian trading and gold was little changed, while oil prices climbed after a two-day decline as industry data showed a sizeable drawdown in U.S. commercial crude inventories.
China’s Shanghai Composite Index rose 0.6 percent to 3,382.21 after reports emerged that China is planning a record budget deficit for 2025 and that the State-owned Assets Supervision and Administration Commission has urged state-owned firms to improve market value management of listed companies.
Hong Kong’s Hang Seng Index advanced 0.8 percent to close at 19,864.55 on hopes that Chinese stimulus measures will help spur consumption.
Japanese markets fell notably, heading into Thursday’s BoJ interest-rate decision. The central bank is likely to keep its benchmark interest rate unchanged as it awaits greater clarity on domestic wages and spending trends as well as policy changes by U.S. President-elect Donald Trump.
The Nikkei 225 Index dropped 0.7 percent to 39,081.71, while the broader Topix Index settled 0.3 percent lower at 2,719.87.
Auto stocks surged on news of a potential Nissan-Honda tie-up. Nissan Motor shares soared 23.7 percent, while Honda Motor fell over 3 percent. Toyota Motor rose over 2 percent and Mitsubishi Motors spiked 19.7 percent.
Seoul stocks rallied, with the Kospi jumping 1.1 percent to 2,484.43. Large-cap shares gained ground, with Hyundai Motor surging 4.8 percent and Samsung Electronics adding 1.3 percent.
Australian markets ended on a flat note after a choppy session. Healthcare stocks gained ground, offsetting losses among energy stocks and gold miners.
Insignia Financial slumped 4.2 percent after the money manager rejected Bain Capital’s A$2.67 billion ($1.69 billion) takeover bid.
Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slipped 0.4 percent to end at 12,865.55.
Commodities
Crude oil futures are climbing $0.71 to $70.79 a barrel after falling $0.63 to $70.08 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,661.70, down $0.30 compared to the previous session’s close of $2,662. On Tuesday, gold slipped $8.
On the currency front, the U.S. dollar is trading at 153.87 yen compared to the 153.46 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0491 compared to yesterday’s $1.0491.
