(Bloomberg) — Stocks lost steam following a furious post-election rally that spurred calls for a breather amid signs of buyer fatigue.
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Equities fell from near all-time highs, with the S&P 500 remaining close to technically overbought levels. That’s after a surge that drove the benchmark gauge up 25% this year. Several measures highlight strong trader optimism, including the latest figures from the American Association of Individual Investors, which showed a spike in bullish sentiment last week.
“The stock market is showing signs that it’s getting ‘tired’,” said Matt Maley at Miller Tabak + Co. “It could be due for a bit of a pullback soon — which would actually be normal and healthy.”
In the run-up to Jerome Powell’s speech on Thursday, traders waded through economic data. US producer prices picked up in October, fueled in part by gains in portfolio management and other categories that feed into the Federal Reserve’s preferred inflation gauge. Applications for unemployment benefits fell to the lowest level since May.
“The question we have is whether Powell’s dovishness will reset the tone for higher long rates. On that question alone, we say ‘no for now’,” noted Andrew Brenner at NatAlliance Securities. “But he will continue to support Fed easing in the near term, and even that will have a limited effect.”
The S&P 500 dropped to around 5,970. The Nasdaq 100 slipped 0.3%. The Dow Jones Industrial Average lost 0.3%. Nvidia Corp. paced tech gains, though Cisco Systems Inc. sank on a conservative annual forecast. Walt Disney Co. jumped 7% on a profit beat.
Treasury 10-year yields slid five basis points to 4.41%. The Bloomberg Dollar Spot Index wavered.
Equities lost steam after a strong post-election rally that reflected optimism that President-elect Donald Trump’s agenda would support corporate growth.
While this bullish momentum remains intact — with investors reluctant to sell just yet — caution is warranted, according to Fawad Razaqzada at City Index and Forex.com. The S&P 500 is…
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