U.S. stocks fell on Wednesday in light trading as investors locked in profits after significant gains this month.
- S&P 500: Fell 0.38% to close at 5,998.74, snapping a seven-day winning streak.
- Nasdaq Composite: Declined 0.6% to finish at 19,060.48.
- Dow Jones Industrial Average: Dropped 138.25 points (0.31%) to settle at 44,722.06, reversing earlier gains of more than 140 points.
Tech Sector Leads Declines
Profit-taking in major technology stocks drove the Nasdaq’s underperformance:
- Nvidia: Slipped over 1% after a stellar year with a 173% gain in 2024.
- Meta Platforms: Declined 0.8% despite a 60% rally year-to-date.
- Dell and HP: Both fell sharply, dropping 12% and 11%, respectively, after issuing weak earnings guidance.
Inflation Data Matches Expectations
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, rose in October:
- Headline PCE: Increased 0.2% for the month and 2.3% year-over-year.
- Core PCE (excluding food and energy): Rose 0.3% monthly and 2.8% annually.
“Today’s data shouldn’t change views of the likely path for disinflation, however bumpy,” said David Alcaly, lead macroeconomic strategist at Lazard Asset Management. He noted that potential inflationary policies, such as new tariffs, could influence future outlooks.
Light Trading Ahead of Thanksgiving
Wednesday marked a shortened trading week ahead of the Thanksgiving holiday:
- U.S. markets were closed Thursday and set for an early close on Friday.
- Trading volume on the New York Stock Exchange was about 20% lower than usual.
November’s Rally Still Intact
Despite Wednesday’s declines, stocks remained poised for solid weekly and monthly gains:
- Dow Jones: Tracking a 1% weekly gain, with a 7% jump for November, marking its best monthly performance of 2024.
- S&P 500 and Nasdaq: On pace to close the week up 0.5% and 0.3%, respectively, with both indexes gaining more than 5% for November.
Post-Election Rally Continues
November’s gains have been fueled by a postelection rally following President-elect Donald Trump’s victory. Investors are optimistic about the market’s trajectory despite Wednesday’s pullback, which reflects profit-taking rather than a shift in sentiment.