The stock market experienced a shift as the Dow closed lower, ending a nine-day winning streak. Investors engaged in profit-taking, triggering a sharp reversal with the Dow Jones Industrial Average falling by 1.3%, the S&P 500 by 1.58%, and the NASDAQ Composite by 1.5%.
The broad selloff, reminiscent of March, was prompted by investors cashing in on the recent rally that propelled the Dow to record highs and brought the S&P 500 close to its all-time peak.
Earlier in the day, stocks were in positive territory, fueled by signs of consumer strength and increased housing activity. The Conference Board’s confidence index surged to 110.7, its highest level since July 2023, driven by labor market optimism and relief on inflation.
Unexpectedly robust existing home sales in November, reaching a six-month high, contributed to the positive sentiment. Meanwhile, 30-year mortgage rates hit their lowest point since June, further supporting the housing market.
However, the rally hit a speed bump as investors absorbed disappointing news from FedEx, considered a bellwether for the U.S. economy. FedEx’s stock plummeted by 12% after it revised down its full-year revenue guidance and reported weaker-than-expected quarterly profit. The company cited “volatile macroeconomic conditions” impacting customer demand.
General Mills also faced headwinds, lowering its annual sales forecast and missing second-quarter estimates, signaling a slower recovery in demand.
On the tech front, Alphabet Inc Class A closed 1% higher despite reports of a potential shake-up in its ad sales unit, focusing on automation and machine learning. Meanwhile, Apple Inc. Meta Platforms Inc. and Microsoft Corporation experienced losses amid the broader market selloff.
Amidst all this, there were talks of a possible merger between Warner Bros. Discovery and Paramount Global, suggesting potential shifts in the entertainment industry.
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