U.S. stocks concluded nearly flat on Tuesday, relinquishing earlier gains that had propelled the S&P 500 and Dow Industrial Average to record highs, as investors anticipated the Federal Reserve’s first rate cut in over four years.
During the session, the S&P 500 reached a peak of 5,670.81, bolstered by fresh economic data that alleviated concerns of a pronounced U.S. economic downturn.
A report from the U.S. Commerce Department indicated an unexpected rise in retail sales for August, buoyed by online shopping, despite a drop in auto dealership sales.
“Expectations were pretty well entrenched before calling into today’s economic data and what they showed was generally a growth environment, but a relatively slow-growth environment,” said Russell Price, chief economist at Ameriprise Financial Services.
Price noted that the extent of the impending rate cut could either amplify inflation fears or stoke concerns that the Fed is lagging in its efforts to stave off a recession.
“What you’re seeing in this afternoon’s trading is the way we pulled off of the all-time high … because tomorrow somebody’s going to be disappointed,” he said.
The Dow Jones Industrial Average slightly dropped by 15.90 points to 41,606.18, while the S&P 500 marginally rose by 1.49 points to 5,634.58. The Nasdaq Composite gained 35.93 points, ending at 17,628.06.
Markets are leaning towards a 65% probability of a 50 basis point cut by the Fed, as indicated by the CME’s FedWatch Tool. This follows a fluctuating market sentiment which saw a much lower likelihood of such a cut just a week earlier.
Microsoft provided the biggest boost to the S&P 500, climbing 0.88% after announcing a new $60-billion buyback plan and a 10% increase in its quarterly dividend.
Energy stocks led gains among the S&P sectors with a 1.41% increase, driven by rising crude prices, while healthcare stocks lagged, dropping by 1.01%.
Intel surged 2.68% after securing Amazon.com’s cloud-services unit as a customer for its custom artificial-intelligence chips, which also saw Amazon shares increase by 1.08%.
The trading session closed with advancing issues outnumbering decliners on both the NYSE and Nasdaq.
The S&P 500 and Nasdaq recorded new highs, while trading volume slightly dipped compared to the average over the last 20 sessions.