U.S. Stocks Pull Back Off Record Highs Ahead Of Inflation Data

(RTTNews) - Following the strong upward move seen in reaction to last week's last elections, stocks gave back ground during trading on Tuesday. The major averages fluctuated over the course of the trading session before eventually closing in negative territory.

The Dow underperformed its counterparts, slumping 382.15 points or 0.9 percent to 43,910.98. The S&P 500 dipped 17.36 points or 0.3 percent to 5,983.99 and the tech-heavy Nasdaq edged down 17.36 points or 0.1 percent to 19,281.40.

The pullback on Wall Street may partly have reflected profit taking, as some traders looked to cash in on the recent strength in the markets.

The major averages have rallied to new record highs in recent days following former President Donald Trump's decisive victory in last week's presidential election.

Trump's return to the White House is expected to be positive for corporations and the U.S. economy, although there are some concerns about the effect planned tariff increases will have on inflation.

Nonetheless, traders seemed reluctant to make more significant moves ahead of the release of closely watched economic data in the coming days.

A highly anticipated report on consumer price inflation is due to be released on Wednesday, while reports on producer price inflation, retail sales and industrial production are likely to attract attention later in the week.

"Inflation-related data releases take on heightened importance as markets try to ascertain whether the Fed can, absent weakness in the labor market, deliver the rate cut cycle it had expected just a few months ago--- and whether the already extended market can withstand the possibility that the Fed could remain higher for longer," said Quincy Krosby, Chief Global Strategist for LPL Financial.

Sector News

Housing stocks moved sharply lower on the day, with the Philadelphia Housing Sector Index plunging by 2.7 percent.

Substantial weakness was also visible among steel stocks, as reflected by the 2.6 percent nosedive by the NYSE Arca Steel Index.

Computer hardware stocks also showed a significant move to the downside, dragging the NYSE Arca Computer Hardware Index down by 2.0 percent.

Telecom, biotechnology and gold stocks also saw considerable weakness, while software stocks showed a notable move to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index slumped by 1.4 percent and Hong Kong's Hang Seng Index dove by 2.8 percent.

The major European markets also showed significant moves to the downside on the day. While the French CAC 40 Index plunged by 2.7 percent, the German DAX Index tumbled by 2.1 percent and the U.K.'s FTSE 100 Index slid by 1.2 percent.

In the bond market, treasuries saw considerable weakness following the Veterans Day holiday on Monday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, spiked by 12.4 basis points to a four-month closing high of 4.432 percent.

Looking Ahead

Trading on Wednesday is likely to be driven by reaction to the Labor Department's report on consumer price inflation in the month of October.