Dow Jones: Market Declines Led by Chevron and Sector Weakness Ahead of Fed

What’s Driving the Market Today?

The Dow Jones Industrial Average dropped 273 points, or 0.6%, on Tuesday as it nears its first nine-day losing streak since the 1970s. The decline reflects concerns over sector rotation, economic data, and the Federal Reserve’s looming interest rate decision. While the Dow falters, the Nasdaq and S&P 500 held up better, each slipping just 0.4%, supported by gains in technology stocks.

Sectors in Focus: Technology Gains Offset Broader Weakness

The divergence between sectors remains evident, with technology stocks outperforming while energy, financials, and industrials drag down the Dow. Nvidia fell deeper into correction territory, dropping another 2% despite AI-driven optimism elsewhere in the sector. Conversely, Broadcom surged, posting a 45% rally over the past week, fueled by strong AI revenue forecasts.

Other sectors saw mixed results. Energy stocks weakened as Chevron fell 1.27%, and industrials like Caterpillar dropped 0.53%. Meanwhile, health care stocks, including Pfizer, bucked the trend with a 2% rise, after reaffirming its revenue guidance for 2025.

Stocks to Watch: Winners and Losers in Tuesday’s Trade

Individual stocks reflected the broader market divide. Tesla gained nearly 2% following an upgrade to “outperform” by Mizuho, which cited potential regulatory support under a Trump administration for autonomous driving technologies. Red Cat shares tumbled 14% after reporting a larger-than-expected loss, reversing gains seen earlier on drone sector optimism.

SolarEdge jumped 14% on the heels of Goldman Sachs’ double upgrade to “buy,” with the firm projecting a 2025 turnaround. Additionally, retail giant Albertsons climbed 1.8% after receiving an “outperform” rating from Telsey Advisory Group, boosting confidence in its growth outlook.

Economic News: Strong Retail Sales Add to Fed Uncertainty

November’s retail sales came in stronger than expected, rising 0.7% and exceeding forecasts of 0.5%. The results mark an acceleration from October’s upwardly revised 0.5%, signaling that consumer spending remains robust ahead of the holiday season. Excluding autos, sales increased 0.2%, slightly below expectations.

These numbers, outpacing the 0.3% rise in consumer price inflation, suggest resilient demand but add to concerns that the Federal Reserve may be acting prematurely with rate cuts. Analysts are now debating whether continued economic strength could fuel inflationary pressures.

The Fed Decision: Traders Await Critical Policy Signal

The Federal Reserve’s upcoming rate decision on Wednesday remains the market’s focal point. CME Group data shows a 97% probability of a quarter-point rate cut, but investors remain wary of its long-term impact. Analysts warn that easing monetary policy too quickly could risk a stock bubble or reignite inflationary concerns.

Comments from Fed Chair Jerome Powell will be scrutinized for future policy signals, as the central bank navigates a delicate balance between supporting growth and controlling inflation. Traders are preparing for volatility if the Fed strikes a more hawkish tone than anticipated.

Market Forecast: Where Could the Market Be Headed Next?

With the Dow under pressure and facing a historic losing streak, near-term sentiment remains bearish for industrials, financials, and energy stocks. Technology and AI-driven names continue to attract investors, offering a potential buffer for the broader market.

The upcoming Fed decision will be pivotal. A dovish signal could spark a short-term rally, while a more cautious stance may lead to further losses, particularly for non-tech sectors. Traders should brace for heightened volatility, with tech strength likely to dominate market direction in the near term.

More Information in our Economic Calendar.