The stock market’s post-election rally lost steam on Friday as investors grew concerned about the path of interest rates. The Dow Jones Industrial Average fell 305.87 points, or 0.70%, to close at 43,444.99. The S&P 500 slipped 1.32% to end at 5,870.62, while the Nasdaq Composite dropped 2.24% to 18,680.12.
Federal Reserve Chair Jerome Powell suggested that the central bank is in no hurry to cut interest rates, noting that the economy’s strong growth will allow policymakers to take their time in deciding the extent of rate reductions. Boston Fed President Susan Collins echoed this cautious perspective, highlighting that October retail sales data showed a 0.4% increase, slightly better than the 0.3% forecast from economists. The tech-heavy Nasdaq 100 suffered its first five-day losing streak since early January, with significant drops from Amazon, Meta, and Nvidia, each falling more than 2%.
The U.S.’ six most valuable companies—Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta—lost a combined $458 billion in market capitalization on Friday. Healthcare stocks also slumped, with the S&P’s healthcare sector dipping 1.9% and Pfizer stock sinking by 4%.
Dow drops amid rate discussions
This followed President-elect Donald Trump’s appointment of vaccine skeptic Robert F. Kennedy Jr. as the head of the Department of Health and Human Services.
Despite the recent declines, some analysts remain optimistic about the U.S. equity market. Kristy Akullian, head of iShares investment strategy at BlackRock, said, “While we think the macro backdrop still bodes well for risk assets, in the near term we should expect some micro volatility, particularly around potential policy shifts under a new administration.
Corporate earnings for the third quarter of 2024 showed mixed results, raising questions about their sustainability. The S&P 500 blended earnings growth rate was 5.4%, marking the fifth straight quarter of earnings growth.
However, only 75% of companies beat analysts’ earnings estimates, below the five-year average of 77%. Small-cap stocks saw outsized losses this week, with the Russell 2000 dropping around 4%, hurt in part by a slide of more than 1% on Friday. Despite this week’s declines, the Russell 2000 is up nearly 5% in November and is poised to finish 2024 more than 13% higher.
