Stock Market Today: Dow snaps 4-day winning streak as S&P 500 edges back from record (2024)

Wednesday's Top Reads

The Dow Jones Industrial Average snapped a four-day winning streak Wednesday, while the S&P 500 ended slightly lower after back-to-back gains. Both indexes were coming off record closes on Tuesday.

The Nasdaq Composite eked out a minor gain.

Oil futures finished lower Wednesday after posting strong gains a day earlier, when China’s announcement of an aggressive monetary stimulus plan sparked a broad commodities rally.

"The prospect of higher supply from OPEC+ keeps bears in the game," said Lukman Otunuga, manager for market analysis at FXTM. Still, West Texas Intermediate oil prices remain "on breakout watch, with resistance at $72 and support at $70," he said.

WTI oil for November delivery lost $1.87, or 2.6%, to settle at $69.60 a barrel on the New York Mercantile Exchange. November Brent crude fell $1.71, or 2.3%, to end at $73.46 on ICE Futures Europe.

Stocks remained mostly lower in the final hour of trading Wednesday, with the energy sector bearing the brunt of losses for the S&P 500.

Gold futures climbed to another record high on Wednesday, a day after its sister metal, silver, settled at its highest in more than 11 years, but both may be ready for a pullback in the coming weeks as daily charts for the metals show what one technician referred to as “upside exhaustion.”

On the futures market, gold for December delivery climbed to an intraday record high of $2,694.90 an ounce on Comex Wednesday and marked an all-time settlement high of $2,684.70, according to Dow Jones Market Data. Silver on Tuesday saw its December contract settle at $32.43 an ounce, the highest most-active contract finish since December 2012. It eased back a bit Wednesday to settle at $32.02.

In a note Wednesday, Jonathan Krinsky, chief market technician at BTIG, said he remains “constructive” on precious metals over the next six to 12 months but added that there are “tactical opportunities that present themselves, and we want to be opportunistic so that we can add into weakness.”

Tesla's stock was rising 0.6% in recent trading, and was having its best month this year, as investors look forward to quarterly deliveries data due out next week, and Tesla's Robotaxi Day scheduled a week after.

Baird analyst Ben Kallo said based on insurance registrations in China and other third-party research, he expects third-quarter deliveries of 480,000, which is well above the current FactSet consensus of 462,000.

But even if the deliveries data, which are expected to released on Oct. 2, are only in-line or even weaker than expectations, Kallo believes the stock is a buy ahead of Robotaxi Day on Oct. 10, which he expects will be a "significant potential catalyst."

He expects Tesla to unveil a new lower-cost EV at the event, which should give a boost to volumes in 2025.

The stock is up 19.4% month to date, which puts it on track for the best monthly performance since it ran up 19.5% in November 2023.

Last week, the Federal Reserve cut its policy rate for the first time in four years, reducing its key interest rate by half a percentage point. Fed-fund futures traders are partially pricing in as much as another 100 basis points of cuts by the end of the year, according to data from CME FedWatch.

Some decentralized finance lending protocols in particular may be revitalized by the rate cuts, according to Chris Rhine, portfolio manager at SPDR Galaxy ETFs.

The first so-called DeFi summer was in 2020, after the Federal Reserve started cutting its policy rate in response to the COVID-19 pandemic, and it was marked by the popularity of several decentralized lending platforms and exchanges, such as Aave, Compound, MakerDAO and Uniswap.

However, as the Fed kicked off its rate-hiking cycle in March 2022, some of the platforms took a major hit. Yields offered by such protocols became less favorable as the risk-free rate climbed, with the U.S. Treasury bills yielding over 5% at one time. Meanwhile, a tightening of overall liquidity made investors more hesitant to direct money into risk assets.

With Fed now cutting its policy rate, some of the DeFi lending protocols may become popular again, Rhine said.

Last week's jumbo rate cut from the Federal Reserve isn't looking like a panacea for what ails the real-estate sector as long-end Treasury yields continue to creep higher, said Jose Torres, senior economist at Interactive Brokers, in a Wednesday note.

"Investors are realizing that the Fed’s journey down the monetary policy stairs may not bolster the ailing real estate sector, with long-end yields remaining elevated despite the central bank’s jumbo rate reduction last week," he wrote. "Against the backdrop, the Treasury curve is steepening sharply as bond vigilantes smell an inflation problem down the road and remain unwilling to lock in the coupons of the day."

Sales of newly built homes in the U.S. fell 4.7% to an annual rate of 716,000 in August, from a revised 751,000 in the prior month, the Commerce Department reported Wednesday. The pace of sales was still the highest since April and topped economist forecasts for a drop to 700,000.

The data was " further evidence of costly duration, with new home sales declining and inventories increasing as builders relied on discounts to support transactions," Torres said.

The S&P 500 edged into negative territory early Wednesday afternoon, losing altitude after edging to a new intraday record, albeit remaining within a very tight trading range.

The Dow Jones Industrial Average remained lower, nursing a loss of around 232 points, or 0.6%, while the tech-heavy Nasdaq Composite clung to a 0.1% gain.

The S&P 500's breakout from its trading range to new highs comes as "bulls have wrestled control from the bears" in the wake of last week's 50 basis point rate cut from the Federal Reserve, said Mark Hackett, chief of investment research at Nationwide, in emailed comments Wednesday.

The initiation of a rate cycle has been a consistent tailwind for equities, with the S&P 500 higher on a 1, 3, 6, and 12-month basis following the first initial rate cut since 1985, Hackett said. Sector leadership has also been notable, with strength in defensives (utilities, consumer staples, and health care) and cyclicals (industrials and materials), with weakness in technology and consumer discretionary, which currently tend to trade at 27 and 25 times forward earnings.

"Investor optimism has surged following the FOMC rate cut as markets break out to record highs and bears move to the sidelines. The prospect for future returns is strong based on history, but leadership is likely to continue to shift and investors should be more discerning about where to allocate dollars " he wrote.,

The S&P 500's utilities sector has advanced nearly 16.8% so far this quarter, on pace for its best quarterly performance since 2003, according to Dow Jones Market Data.

The group of companies that provide services such as electricity, water and gas has been one of the top-performers among the S&P 500's 11 sectors in the third quarter of 2024 (see table above). The broader index has risen about 4.7% in the same period, according to FactSet data.