U.S. and Canadian stocks finished lower on Tuesday, breaking a string of record closing highs, after Federal Reserve Chair Jerome Powell indicated a cautious approach to the next U.S. interest rate decision.
The Nasdaq led declines, with shares of Nvidia falling 2.8% after rising in the previous session, when the chipmaker said it plans to invest up to US$100 billion in OpenAI. The S&P/TSX Composite Index ended down 0.48%, after closing higher in the past four trading sessions and briefly climbing above 30,000 for the first time Tuesday morning.
It was the first pullback for the U.S. indexes since last Wednesday. After surging from a bottom in April, the broad U.S. stock market has been facing criticism that it’s shot too high, too fast and become too expensive. Even Powell said on Tuesday that stock prices broadly look “fairly highly valued.”
But Powell offered little hint of when he thinks the Fed might next cut interest rates. The Fed last week cut rates for the first time this year and indicated further cuts may be coming.
“He was somewhat on the dovish side, but also he showed cautiousness, and that indicates that while he left the door open for another rate cut, there was really no hint of when and how much the next rate cut could be,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“The market began to sell off on that,” he said, adding: “It was also ripe for some sort of a pullback.”
The Dow Jones Industrial Average fell 88.76 points, or 0.19%, to 46,292.78, the S&P 500 lost 36.83 points, or 0.55%, to 6,656.92 and the Nasdaq Composite lost 215.50 points, or 0.95%, to 22,573.47.
Helping to limit declines on the Dow, Boeing shares rose 2% after it secured an order from Uzbekistan Airways worth over $8 billion.
After the closing bell, shares of Micron Technology were up 0.7% as the company reported results and gave an upbeat forecast. The stock ended the regular session up 1.1%.
The S&P/TSX composite index ended down 143.35 points at 29,815.63. It has advanced 20.6% since the start of the year.
The Toronto market’s industrials sector fell 1.5% and technology lost 2.9%. Shares of e-commerce company Shopify Inc were down 4.5%. Energy was a bright spot, rising 1.1%. The price of oil settled 1.8% higher at US$63.41 a barrel after a deal to resume exports from Iraq’s Kurdistan stalled.
In the bond market, Treasury yields ticked lower. The yield on the 10-year U.S. Treasury eased to 4.11% from 4.15% late Monday.
Declining issues outnumbered advancers by a 1.12-to-1 ratio on the NYSE. There were 561 new highs and 86 new lows on the NYSE. On the Nasdaq, 1,786 stocks rose and 2,871 fell as declining issues outnumbered advancers by a 1.61-to-1 ratio. Volume on U.S. exchanges was 18.89 billion shares, compared with the 17.66 billion average for the full session over the last 20 trading days.
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Reuters, The Associated Press, Globe staff