U.S. stocks traded mostly lower Tuesday, as investors returned from a holiday and found few reasons to take equities higher following a brisk, record-setting run-up for the major benchmarks in recent weeks.
U.S. markets were closed Monday in observance of Martin King Luther Jr. Day.
How are benchmarks faring?
The Dow Jones Industrial Average DJIA, -0.31%, fell 27 points, or 0.1%, at 29,320, on track to break its five-day winning streak. The S&P 500 index SPX, -0.31% shed 2 points, or around 0.1%, at 3,327 and the Nasdaq Composite index COMP, -0.36% was down 7 points, or 0.1%, to trade at 9,382, but briefly turned positive mid-session to set a record intraday high of 9,397.58.
Last week, the Dow, S&P 500 and Nasdaq Composite Index COMP, -0.36% all posted their best weekly gains since Aug. 30, according to FactSet data.
DJIA, -0.31% The Dow has risen for five of the past six weeks, with a year-to-date return of 2.6%. The S&P 500 has gained for two consecutive weeks, with a year-to-date return of 2.9% and the Nasdaq has risen for six straight weeks, with a year-to-date return of 4.6%.
What’s driving the market?
Quelling some of last week’s record-setting enthusiasm to start this week were fresh concerns about sluggish economic growth outside of the U.S., the start of a presidential Senate impeachment trial of President Donald Trump, and worries that a respiratory virus in China, which has infected hundreds of people, could harm an already-weak expansion in Asia.
Softness in markets Tuesday is being driven “by a combination of fears related to the virus and investor fatigue,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company. “It provides an opportunity for some people to take some profits.”
On Monday, the International Monetary Fund, or IMF, downgraded its global economic growth forecast from 3.4% to 3.3% for 2020, with the organization projecting that the U.S. economy to grow by 2.0% this year, a cut of 0.1 percentage points compared with the IMF’s October 2019 forecast.
Meanwhile, President Donald Trump’s impeachment trial began in earnest on Tuesday, with Sen. Majority Leader Mitch McConnell submitting a proposalthat could result in a speedy trial and Trump possibly being acquitted of wrongdoing.
Markets have largely dismissed impeachment talk because investors see a low likelihood that Trump will be removed from office following a Senate trial.
“While this could continue to absorb an exorbitant amount of media attention, the possibility of Trump actually being impeached is close to zero, as it would require 20-some Republican senators to vote against their party, which is almost unfathomable. Hence, this is a non-event for markets,” wrote Marios Hadjikyriacos, investment analyst at XM, in a daily note.
For his part, Trump touted the U.S. economy’s strength in a speech in Davos, Switzerland, kicking off an important gathering of business leaders at the World’s Economic Forum. “I’m proud to declare that the U.S. is in the midst of an economic boom the likes of which the world has never seen,” Trump said. “America’s economic turnaround has been nothing short of spectacular.”
He said trade talks with Brussels were going well even as he suggested import duties on European cars were still on the table if an agreement was not struck. He also confirmed France would delay until the end of 2020 a controversial tax on digital services that would impact U.S. tech giants after the Trump administration threatened retaliatory tariffs.
Investors were keeping one eye on the coronavirus outbreak in China, which originated in the city of Wuhan, and has sickened more than 200 people, leaving six dead, according to Chinese state media and health officials. The outbreak of the pathogen has been cited as the catalyst of declines in equities markets, mostly in Asian markets. And the World Health Organization was said to be considering declaring an international public health emergency over the virus, as it did with swine flu and Ebola.
“Naturally, people will look at the SARs, [Severe acute respiratory syndrome], epidemic in 2002-03 which occurred mainly in Hong Kong and Southern China as well as infecting travelers from other countries,” wrote analysts at Jefferies in a Tuesday report.
“The speed and scale of the spread of the virus comes ahead of the Chinese Lunar New Year when millions of Chinese travel on the mainland back to their hometowns,” they wrote.
On Friday, U.S. stocks finished at records after December housing starts data that showed home construction rising 16.9%, to annual rate of 1.608 million units, to the fastest pace since 2006.
Which stocks are in focus?
Shares of Boeing Co. BA, -0.86% fell 0.6% Tuesday after news that the embattled aerospace company is in talks to “secure a loan of $10 billion or more,” according to a report by CNBC. The company faces rising costs related to the aftermath of two fatal crashes of its 737 Max airplanes.
How are other markets trading?
Crude-oil prices were headed lower, with the cost of a barrel of West Texas Intermediate crude CLG20, +0.03% for February delivery slipping 9 cents, or 0.2%, to $58.45 a barrel on the New York Mercantile Exchange. In precious metals, the price of an ounce of gold for February delivery GCG20, -0.15% on Comex fell $3.40, or 0.2%, $1,556.90.
Asian stocks tumbled overnight amid the virus-outbreak fears, as the China CSI 300 000300, -1.71% tumbled 1.7%, Japan’s Nikkei 225 NIK, -0.91% declined 0.9% and Hong Kong’s Hang Seng Index HSI, -2.81% fell 2.8%.
Read on Marketwatch