Stocks fell Tuesday, with the Dow Jones Industrial Average posting its 9th straight daily decline, as investors await a decision tomorrow on interest rates from the Federal Reserve.
The Dow closed 0.6% lower as the blue chip index rides its longest daily losing streak since 1978. The S&P 500 and Nasdaq, which were coming off gains the previous session, fell 0.4% and 0.3%, respectively, but remain less than 1% away from record highs.
Large-cap technology stocks were mixed on Tuesday. Shares of AI investor favorite Nvidia (NVDA) fell 1.2%, extending a slump that has pushed the stock into a technical correction, while Broadcom (AVGO) slid 3.9%, giving back some of the huge gains posted by the chipmaker since reporting strong earnings last week. Amazon (AMZN), Alphabet (GOOGL) and Meta Platforms (META) were also losing ground.
Tesla (TSLA) was once again leading the gainers among the mega-cap names, rising 3.6% amid continued optimism about the prospects for the EV maker in a Trump administration given CEO Elon Musk's close relationship with the president-elect. Apple (AAPL) and Microsoft (MSFT) also inched higher.
Health care stocks remained under pressure following Donald Trump's recent comments about removing the "middleman" in the prescription drug markets. Humana (HUM) shares lost 10.2%, the steepest daily drop of any S&P 500 stock on Tuesday, after Piper Sandler analysts flagged earnings risks related to certain plans that provide coverage to military veterans.
Pfizer (PFE) led S&P 500 gainers, rising 4.7%, after the pharmaceutical company affirmed its full-year 2024 projections and issued guidance in line with analysts' estimates.
The big event for market watchers this week is the two-day meeting of the Federal Reserve's policy committee, which began today. The Fed is widely expected to cut its benchmark interest rate, as it did in September and again last month. In addition to the decision on rates, investors will be paying close attention to what Fed officials say after the meeting on Wednesday about the health of the economy and the outlook for rates in 2025.
The yield on 10-year Treasurys, which is correlated with expectations about where interest rates are headed, was unchanged today at 4.40%.
Bitcoin was at $106,100 after hitting a new record high of $108,300 this morning. The digital currency has gained more than 50% since the election on investor optimism that the Trump White House and a crypto-supportive Congress will adopt measures that benefit the asset class.
Gold futures were down slightly at around $2,660 an ounce, while crude oil futures fell nearly 1%.
Biggest S&P 500 Movers on Tuesday
Decliners
- Health care stocks remained under pressure following President-elect Donald Trump's comments about removing the "middleman" in the prescription drug markets. Humana (HUM) shares lost 10.2%, the steepest daily drop of any S&P 500 stock on Tuesday, after Piper Sandler analysts flagged earnings risks related to certain plans that provide coverage to military veterans. CVS Health (CVS) shares sank 5.5%, extending a string of recent losses posted as political sentiment against the pharmacy benefit management (PBM) business gathers steam.
- Shares of government technology provider Amentum Holdings (AMTM) tumbled 9.7%. Although the company swung to a fourth-quarter profit from a loss a year ago, Amentum executives said on the company's earnings call that they expect a winding down of certain government programs to weigh on growth in fiscal 2025.
- Broadcom (AVGO) shares sank 3.9%, reversing a small portion of a massive run-up in the stock over the past few sessions as the markets digested the chipmaker's strong earnings results, artificial intelligence (AI) growth, and collaboration with Apple (AAPL) on an AI server chip. Despite Tuesday's drop, Broadcom's market capitalization remains above the $1 trillion threshold, which it pierced for the first time last week.
Advancers
- The top performance in the S&P 500 on Tuesday belonged to shares of Pfizer (PFE), which jumped 4.7% after the pharma and biotech giant provided guidance for fiscal 2025. The company's full-year profit forecast was essentially in line with analysts' estimates, and Pfizer anticipates sales of its COVID-19 vaccine and medication to remain consistent with 2024 levels.
- Fox Corp. (FOXA) shares added 4.3% following reports that FOX News posted a record of more than 400 million views on YouTube during November, topping all other news platforms. FOX News also holds an advantage over its competitors regarding cable TV ratings and social media engagement. Fox Corp. Class B (FOX) shares were up 4.1%.
- Tesla (TSLA) shares built on the previous session's record high, advancing 3.6% on Tuesday. Mizuho became the latest research firm to boost its view on the electric vehicle (EV) juggernaut, upgrading Tesla stock to "outperform" from "neutral" and more than doubling its price target. Echoing other analysis, Mizuho cited expectations for more relaxed self-driving regulations and other tailwinds for Tesla under the incoming presidential administration.
What You Need to Know Ahead of Fed's Rate Decision
The Federal Reserve's Open Markets Committee kicked off its two-day meeting Tuesday.
The Fed is widely expected to cut the key federal funds rate by a quarter percentage point this week, but it's unclear what the committee could project for 2025 in its Summary of Economic Projections, which will be released Wednesday alongside the statement on the rate decision.
Market participants and economists will be paying attention to Fed Chair Jerome Powell's message when he addresses reporters at the close of the meeting on Wednesday afternoon.
Read the full article here.
Shares of Teva and Sanofi Soar After Positive Drug Test Results
U.S.-traded shares of Teva Pharmaceuticals (TEVA) and Sanofi (SNY) took off Tuesday after the two drugmakers reported positive results from a study of their treatment for ulcerative colitis (UC) and Crohn’s disease.
A press release from Teva on Tuesday said the Phase 2b trial of the human monoclonal antibody duvakitug found that the substance met the primary endpoints.
It noted that UC patients given a low dosage and high dosage of the drug achieved clinical remission of 36.2% and 47.8%, respectively, higher than those receiving a placebo. For Crohn's disease patients, the results were 26.1% and 47.8%, respectively, also above those taking a placebo.
Dr. Houman Ashrafian, head of research & development at Sanofi, said the results show “that duvakitug could represent the next frontier in treating ulcerative colitis and Crohn’s disease.”
Teva and Sanofi said they plan to launch a Phase 3 trial for duvakitug pending regulatory discussions.
Teva's U.S.-traded shares were at their highest level in six years Tuesday, up 27% at $20.90 recently. The stock has almost doubled in price this year. Sanofi's U.S.-traded shares moved up 7% to $49.10 and are near unchanged since the start of 2024.
Amentum Plunges on Expected Winding Down of Government Programs
Amentum Holdings (AMTM) swung to a fourth-quarter profit but shares sank Tuesday when executives said in the company's earnings call that they see fiscal 2025 growth being affected by an expected winding down of certain government programs.
The government technology provider reported fourth-quarter earnings per share (EPS) of $0.28, compared with a loss of $0.07 per share a year ago. Revenue rose 3.5% year-over-year to $2.21 billion. It affirmed its full-year guidance and added a fiscal 2025 adjusted EPS estimate of $2.00 to $2.20.
However, Chief Financial Officer Travis Johnson said on the company's earnings call that "growth driven by new program awards ... is expected to be partially offset by the wind down of certain historical programs," according to a transcript provided by AlphaSense.
Amentum joined the S&P 500 Index on Sept. 30 after it was spun off from engineering and construction company Jacobs Solutions (J) following its merger with the latter's Critical Mission Solutions and Cyber and Intelligence businesses. However, that was short-lived, as S&P Dow Jones Indices announced earlier this month that Amentum would be removed from the index and placed in the S&P SmallCap 600 Index, effective Dec. 23.
The stock was down 10% in recent trading, leading S&P 500 decliners today.
EVgo Plunges as Biggest Investor Sells 23 Million Shares
Shares of EVgo (EVGO) tumbled Tuesday when the electric vehicle (EV) charging station operator announced a secondary public offering of its stock by its largest investor.
The company reported that EVgo Holdings, an affiliate of LS Power Equity Partners, is planning to sell 23 million shares of Class A common stock, and intends to give the underwriters a 30-day option to purchase an additional 3.45 million shares at the public offering price.
EVgo noted that it was not putting any of its shares on the market, and the proceeds of this sale will go entirely to LS Power.
While EVgo did not detail EVgo Holdings' Class A stock stake, the company did show that it owns 195.8 million shares of Class B stock, giving EV Holdings 66.5% of EVgo's total investor voting power.
Last week, EVgo said it had closed on $1.25 billion in Department of Energy loan guarantees to install 7,000 EV chargers throughout the country over the next five years. However, its warning that its business would "be materially and adversely affected" if it failed to meet the loan conditions sent shares lower.
Despite losing of roughly a quarter of its value Tuesday, shares of EVgo are up about 30% in 2024.
Pfizer Rises as 2025 Outlook in Line With Expectations
Pfizer (PFE) shares rose Tuesday morning after the pharmaceutical company affirmed its full-year 2024 projections and issued 2025 revenue and adjusted profit guidance in line with analysts' estimates.
Pfizer said it expects 2024 revenue to range from $61 billion to $64 billion, with adjusted earnings per share (EPS) projected between $2.75 and $2.95. According to estimates compiled by Visible Alpha, analysts project $63.01 billion in revenue and adjusted earnings of $2.93 per share.
For 2025, Pfizer projects the same revenue range, while analysts see a slight bump to $63.24 billion. Pfizer expects its adjusted EPS will rise slightly to $2.80 to $3.00, while analysts project $2.89.
Pfizer was successful in its goals to cut $4 billion in costs by the end of 2024, the company said Tuesday, with an additional $500 million in savings expected to be realized over the next year. The drugmaker has returned to revenue growth in its two most recent quarters for the first time since sales of its COVID vaccine peaked.
Pfizer shares recently traded up nearly 4%, leading S&P 500 gainers, but are still down about 9% this year.
Supermicro Price Levels to Watch After Recent Slump
Super Micro Computer (SMCI) shares moved higher in early trading Tuesday after tumbling yesterday following news that the stock will be removed from the Nasdaq 100 Index and reports that the embattled server maker is exploring ways to raise capital.
The stock has had a volatile year, rising to a closing high of $119 in March on the back of artificial intelligence (AI)-driven demand before plummeting in mid-November to around $18 following fears of a potential Nasdaq delisting after accounting anomalies led to delayed financial reporting.
Over the past month, Supermicro shares have recovered 80% after the company hired a new auditor and secured a filing extension until Feb. 25, but had lost nearly a quarter of their value in the previous five trading sessions as investors assess the company’s outlook.
The stock was up 4% at around $35 about an hour into Tuesday's trading session.
Supermicro shares registered a decisive close below the 50-day moving average on Monday. The relative strength index (RSI) confirms weakening price momentum, with the indicator flashing a reading below 50 for the first time since late November.
Investors should watch major support levels on Supermicro's chart around $26 and $18, while also monitoring crucial resistance levels near $39 and $50.
Read the full technical analysis piece here.
Dow Futures Lower as Index Rides 8-Day Losing Streak
The Dow Jones Industrial Average is poised to open lower again Tuesday, with the index riding its longest daily losing streak in six years.
The Dow has closed lower in eight straight sessions, giving up nearly 3% over that period. The S&P 500 is near unchanged over the same period, while the Nasdaq Composite has gained 2.2% and hit new record highs.
Tesla Price Levels to Watch as EV Maker Continues to Rally
Tesla (TSLA) shares are moving higher again Tuesday, extending a post-election rally that has sent the stock soaring to record highs.
Wedbush on Monday lifted its price target to $515 from $400 but noted that the stock could reach as high as $650 by the end of next year, arguing that the incoming Trump administration will give the legacy EV maker’s self-driving and artificial intelligence (AI) initiatives a boost.
The stock was up 2.5% at around $475 about two hours before Tuesday's opening bell.
Through Monday’s close, Tesla shares have surged about 85% since the start of the year, with most of those gains coming after the Nov. 5 election on optimism that CEO Elon Musk’s close ties with President-elect Donald Trump will streamline the automaker’s approval processes.
The shares have trended sharply higher after breaking out from an ascending triangle, though the relative strength index signals extremely overbought conditions, which could lead to short-term profit-taking.
Bars pattern analysis, which extracts the stock’s sharp trending move from late June to early July and overlays it from the ascending triangle’s top trendline, forecasts a bullish target of around $510.
Investors should monitor key support levels on Tesla's chart near $360, $300, and $265.
Read the full technical analysis piece here.