Stocks Decline for Third Day as 2025 Nears End
Stocks ended Tuesday modestly lower even after minutes from the Federal Reserve’s December meeting reinforced expectations for further interest-rate cuts next year. Silver and gold bounced back after plunging from all-time highs.
The S&P 500 fell 0.1% — down for a third consecutive session — after barely budging for most of the day. Treasury yields climbed, with US 10-year rate around 4.12%. The Bloomberg dollar spot index rose.
Apart from the release of the Fed’s meeting minutes, there has generally been a lack of major catalysts to move markets in recent days, especially as news flow and trading volumes have been muted. A record of the US central bank’s most recent meeting showed that most Fed officials supported further rate cuts if inflation continues to decline over time. But it also highlighted the divisions among policymakers, and how difficult it was for them to lower rates by a quarter percentage point earlier this month.
To keep pushing higher next year, the equity market needs a dovish Fed, Amanda Agati, PNC Asset Management Group’s chief investment officer said on Bloomberg Television on Tuesday.
“I joke that the equity market is like a kid in a candy store, braving a sugar high for more policy accommodation, a more dovish Fed — but it doesn’t know what’s good for it,” she said. “The bond market is the adult in the room taking away the last lollipop. It is maybe the first time in observable market history that we’re seeing the market react to the deficit and debt level concern. I think there’s continued upward pressure on long yields, for sure.”
US President Donald Trump, on Monday, said that he has a preferred candidate to be the next chair of the Fed, but is in no hurry to make an announcement. He also mused that he might fire Jerome Powell.
“I think a firing of a Fed chair in the new year is not something that the market is priced for, but to the extent that we stay a little more dovish and don’t start talking about moving in the opposite direction, the market can probably work through the noise,” Agati said.
Traders on Tuesday also parsed data showing home-price growth in the US ticked up in October.
Source : Bloomberg.com
