NEW YORK: Wall Street’s scorching rally took a pause on Thursday as investors, confronted with a lack of fresh catalysts, struggled to justify the lofty stock valuations fueled by the bull run.
While stocks have defied bubble concerns and held strong even during a seasonally weak stretch, some analysts worry that a swift pullback is on the cards if the US Federal Reserve does not cut interest rates as aggressively as the markets expect.
Minutes from the central bank’s September meeting, released on Wednesday, showed lingering inflation concerns among policymakers.
New York Fed President John Williams told the New York Times that he backs more rate cuts this year. Investors will also tune in to remarks from Fed Board Governor Michael Barr and San Francisco Fed President Mary Daly.
Any hawkish tilt could weigh on equities, which have largely been buoyed by rate cut hopes and the artificial intelligence boom.
At 11:59 a.m. ET, the Dow Jones Industrial Average fell 145.34 points, or 0.31 percent, to 46,456.19. The S&P 500 lost 16.21 points, or 0.24 percent, to 6,737.51, while the Nasdaq Composite was down 47.72 points, or 0.21 percent, at 22,995.90.
The S&P 500 consumer discretionary stocks fell 0.9 percent, as Tesla slipped 1.9 percent and Amazon dipped 0.5 percent. The US National Highway Traffic Safety Administration said it was opening an investigation into 2.88 million of Tesla’s vehicles equipped with the Full Self-Driving system.
Tech stocks were flat. Apple, Microsoft and AppLovin fell 1.5 percent, 1 percent and 4.9 percent, respectively. The stocks also weighed on the Nasdaq.
The S&P 500 industrials sector fell 0.9 percent, with Boeing down 3.2 percent and Honeywell dropping 2.1 percent. Yet, some analysts bet that the nearly three-year-old bull market might still have room to run.
“Public markets have shown striking resilience to the policy-driven volatility of recent months. That’s a reminder that investor appetite for high-quality growth remains robust, especially in tech,” said Isabelle Freidheim, founder of Athena Capital.
Another flicker of hope for risk assets could come from easing geopolitical tensions, as Israel and Hamas signed off on the first phase of a proposed Gaza peace deal.
Delta Air Lines shares jumped 5.1 percent. The airline provided an upbeat forecast for the current quarter, after posting stronger-than-expected third-quarter earnings.
PepsiCo rose 2.2 percent after the beverage giant topped Wall Street expectations for third-quarter revenue and profit.
Shares of US homebuilders fell. Pultegroup and D.R. Horton declined 5.2 percent and 4.5 percent, respectively. They were among the top losers on the benchmark index.
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