Stocks marched higher throughout most of Wednesday's session but fell off a cliff in mid-afternoon trading. Volume is starting to taper off ahead of the long holiday weekend, with the stock and bond markets closed Monday for Christmas Day. Based on today's price action, it seems the market participants who stuck around chose to take some profits following the market's red-hot run.
The Dow Jones Industrial Average was up 0.2% at its intraday peak – heading for its sixth straight record close – before ending the day down 1.3% at 37,082. The S&P 500 shed 1.5% to 4,698, and the Nasdaq Composite fell 1.5% to 14,777. Both the Dow and the Nasdaq snapped nine-day winning streaks.
The stock market has been rallying on optimism over easing inflation and expectations the Federal Reserve will start cutting interest rates as soon as Q1 of next year. According to CME Group, futures traders are pricing in a 70% chance of a quarter-point rate hike in March. Markets also assign a 56% probability to the federal funds rate being an entire percentage point lower in July from its current range of 5.25-5.5%.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The next inflation update comes Friday with the release of the November Personal Consumption and Expenditures (PCE) index, which measures consumer spending.
Consumer confidence spikes in December
Consumer confidence and existing home sales were the two big reports on the economic calendar Wednesday. Data from The Conference Board showed its Consumer Confidence Index surged to 110.7 in December from November's downwardly revised reading of 101.0.
"December's increase in consumer confidence reflected more positive ratings of current business conditions and job availability, as well as less pessimistic views of business, labor market, and personal income prospects over the next six months," said Dana Peterson, chief economist at The Conference Board. Rising prices remain a top concern for consumers, the survey found.
Separately, the National Association of Realtors (NAR) said existing home sales ticked up by 0.8% from October to November and were down 7.3% year-over-year. Lawrence Yun, chief economist at NAR, said high mortgage rates were to blame for the weakness in sales of previously owned homes, but he anticipates a turnaround as mortgage rates have declined recently.
FedEx, General Mills sink on soft guidance
In single-stock news, FedEx (FDX) tumbled 12.1% after the logistics giant reported earnings. In addition to falling short on both the top and bottom lines in its fiscal second quarter, FedEx lowered its full-year revenue outlook for a second time, now expecting a "low-single-digit percentage decline" in fiscal 2024 revenue vs its prior outlook for "approximately flat revenue growth."
Despite today's spiral, Baird analyst Garrett Holland says investors should "remain buyers" of the industrial stock. FedEx is a "leader in global express delivery," and is "well-positioned to capitalize on secular growth in e-commerce," Holland writes in a note to clients. "Buy on weakness as cyclical leverage, structural margin opportunity, and attractive valuation continue to make FDX a top large-cap idea for 2024."
General Mills (GIS, -3.6%) was another post-earnings decliner. The Cheerios maker reported higher-than-expected fiscal second-quarter earnings of $1.25 per share, but revenue of $5.1 billion missed analysts' estimates. The company also lowered its full-year revenue forecast, citing "a continued challenging consumer landscape."
GIS continues to see "double-digit cost inflation in the second half of fiscal 2023 and didn't rule out any additional price increases," says CFRA Research analyst Arun Sundaram (Sell). "We sense it will be increasingly difficult for GIS to pass through incremental costs over the next few quarters, particularly since retailers seem to be pushing back more."
Related content
- Consumers Feel Glum About the Economy: The Kiplinger Letter
- All 30 Dow Jones Stocks Ranked: The Pros Weigh In
- Best Investing Moves to Make Before the End of the Year
-
RMD Deadline April 1: Five Tax Strategies to Manage Your 2025 IncomeTaxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
Stock Market Today: Dow Sinks 715 Points as Inflation Unrest GrowsInflation worries are showing up in both hard and soft data.
-
Stock Market Today: It's Going to Stay Choppy for StocksAuto-focus can show us a lot about uncertainty on the ground and in the stock market.
-
Stock Market Today: Auto Tariffs Send Stocks LowerThe main indexes snapped their win streaks after the White House confirmed President Trump will talk about auto tariffs after the close.
-
Stock Market Today: Stocks Seesaw After Big Market RallyThe latest consumer confidence data showed sentiment remains low.
-
Stock Market Today: Markets Celebrate Trump's Tariff DétenteConsumer discretionary stocks led 10 of the 11 S&P 500 sector groups well into the green.
-
Stock Market Today: Stocks Swing Higher After Early SlumpNegative earnings reactions for Nike, FedEx and Micron kept pressure on the main indexes, though.
-
Stock Market Today: Stocks Struggle After Big Fed GainsAn unexpected rise in existing home sales couldn't save stocks on Thursday.
-
Stock Market Today: Stocks Enjoy a Fed Day Relief RallyThe question now is whether Jerome Powell and other policymakers can get the balance right given all the new noise.
