Traders work on the floor of the New York Stock Exchange.
NYSE
Stock futures were little changed in overnight trading after the Nasdaq Composite registered its worst session since October.
Futures tied to the Dow Jones Industrial Average slipped 2 points, while S&P 500 futures and Nasdaq-100 futures hovered near the flatline.
In after-hours trading, Outback Steakhouse owner Bloomin’ Brands jumped more than 5% after it added two new members to its board. The additions are in accordance with an agreement Bloomin’ reached with activist investor Starboard Value.
Stocks started the new calendar year on a sour note, with the S&P 500 falling 0.6% and the 30-stock Dow finishing less than 0.1% higher in regular trading. The Nasdaq Composite dropped more than 1.6% for its worst day since October, dragged down by major technology stocks and a nearly 4% decline in Apple after Barclays downgraded the iPhone maker.
Artificial intelligence beneficiaries Nvidia, Advanced Micro Devices slumped 2.7% and 6%, respectively, while chatbot challengers Alphabet and Microsoft lost more than 1%. The VanEck Semiconductor ETF (SMH) dropped 3.4%, while Intel shed 4.9%.
“The burden of proof being on the bears is exactly how we’re starting the year,” Strategas’ Chris Verrone said on CNBC’s “Closing Bell: Overtime” on Tuesday. “When you think about the momentum surge we saw to end 2023, we’re talking about things that are rare.”
Short-term corrections are nothing out of the ordinary in a market that’s coming off of fresh highs and entering primary season, he added, noting that the longer-term setup looks positive on a six- to twelve-month horizon.
The market’s coming off a breathtaking year that saw all the major averages bounce back from a devastating 2022. The S&P 500 surged more than 24% and capped off its longest weekly winning streak since 2004, while the Nasdaq jumped 43% for its best year since 2020.
The rotation back into risk assets stemmed from easing inflation and a drop in the 10-year Treasury yield, which finished the year below 3.9% after hitting 5% in October. An end to the Federal Reserve’s aggressive hiking campaign and anticipation of rate cuts in 2024, coupled with heightened hopes for a soft landing, have also boosted sentiment in recent weeks. As of Tuesday afternoon, markets are pricing in a nearly 70% likelihood of cuts beginning in March, according to CME Group’s FedWatch tool.
Minutes from the Fed’s December policy meeting due out Wednesday, and remarks from Richmond Fed President Tom Barkin, could offer further clues into the rate path ahead before the central bank meets later this month. The job openings report for November and December’s ISM manufacturing data are also due.
