Stocks Retreat as Bond Yields Spike Higher

US benchmark equity indexes retreated from Monday's all-time high closing levels as markets parsed comments by two Federal Reserve officials and awaited official consumer inflation data for October.

The Dow Jones Industrial Average fell 0.9% Tuesday to close at 43,911, while the S&P 500 dropped 0.3% to 5,984. The Nasdaq Composite lost 0.1% to 19,281.4. Materials saw the steepest decline among sectors, while communication services, technology, and consumer staples posted gains.

The US economy is in "a good place," while interest rates are off their recent peak and historic lows, Richmond Fed President Tom Barkin said. This puts policymakers in a position to "respond appropriately" irrespective of how the economy evolves, he added.

Separately, Minneapolis Fed President Neel Kashkari said the US monetary policy is "modestly restrictive," with short-term borrowing costs continuing to cool inflation and slow the economy, though not by much, Reuters reported.

On Thursday, the central bank's Federal Open Market Committee reduced its benchmark lending rate by 25 basis points, following a 50-basis-point cut in September.

The US 10-year yield jumped 12 basis points to 4.43% Tuesday, while the two-year rate advanced 8.6 basis points to 4.34%.

In economic news, US consumers' inflation expectations cooled in October, while labor market concerns eased, according to a survey by the New York Fed.

Official data are expected to show Wednesday that US consumer inflation rose 0.2% sequentially and 2.6% annually last month, according to a Bloomberg-compiled consensus.

Official producer prices data for October are scheduled to be released Thursday.

Small business optimism in the US rose more than projected in October, while the uncertainty index hit a record high, though that's likely to improve now that the presidential election is over, according to the National Federation of Independent Business' latest survey.

Donald Trump won the election last week, marking his return to the White House.

In company news, Mosaic shares dropped 7.7%, the steepest decline on the S&P 500, after its third-quarter financial results fell more than expected.

Amgen was the worst performer on the Dow and the Nasdaq, and among the worst on the S&P 500, down 7.1%.

Tyson Foods surpassed top- and bottom-line expectations for its fiscal fourth quarter and issued guidance implying a slight cooldown in sales in the new year amid ongoing uncertainties with its beef business. The company's shares rose 6.6%, the top gainer on the S&P 500.

Live Nation Entertainment shares gained 4.7%, among the best performers on the S&P 500. The company reported mixed third-quarter results late Monday and said it's seeing strong demand in the current quarter and into 2025 for its Ticketmaster sales segment.

West Texas Intermediate crude oil was little changed at $68.01 a barrel Tuesday. The Organization of the Petroleum Exporting Countries reduced its 2024 and 2025 global oil demand projections for the fourth straight month while raising its world economic growth forecasts.

Gold fell 0.4% to $2,607 per troy ounce, while silver rose 1% to $30.92 per ounce.

The Toronto Stock Exchange closed at a record high on Tuesday, pushed up as investors continue to add risk following the U.S. elections while Shopify rose 21% following its third-quarter earnings release.

The S&P/TSX Composite Index closed up 133.73 points to 24,923.01, topping the prior high of 24,845,93 on Nov.7. Information Technology, up 6.38%, was the day's biggest gainer following Shopify's results, while Base and Battery Metals, down 2.3%, were the biggest decliners.

Shopify closed up $26.89 to $152.26, its highest since January, 2022. National Bank Financial reiterated its outperform rating on the shares while boosting its price target to US$140.00 from US$100.00.

"Shopify reported strong FQ3 results. While revenue was essentially in line - profitability was firmly ahead of expectations. Importantly, that profitability was confirmation of the company's narrative this past year towards (increased) capital discipline which began less than a year ago at the company's investor day when it laid out a number of initiatives in that effort. The FQ3 results (and outlook) confirmed that narrative," the investment bank wrote.

West Texas Intermediate (WTI) crude oil closed with a minor gain on Tuesday, rebounding from two losing sessions that pushed prices 6% lower, even after OPEC again lowered its demand forecast for this year and next.

WTI crude for December delivery closed up US$0.08 to settle at US$68.12 per barrel, while January Brent crude, the global benchmark, closed up US$0.06 to US$71.89.

Gold traded late afternoon on Tuesday as the dollar and treasury yields continued their post-election advance. Gold for December delivery was last seen down US$10.60 to US$2,607.10 per ounce.

Scotiabank today noted new data that confirms most Canadian households are "holding up," albeit "not all." For the first time since 2019, the bank said, Canada provided a more granular look at the financial health of households with the release of the 2023 Survey of Financial Security. Scotia added it corroborates its earlier effort to piece together such a picture using more timely but aggregated data.

According to Scotia, "the picture is remarkable". It noted the median net worth of all households jumped by over a third, to $520,000, in 2023 relative to its pre-pandemic, inflation-adjusted level. The imputed annual pace of wealth accumulation at 8% was twice the average of the previous two decades. And, it also noted, survey data would already reflect house price corrections that occurred mostly in 2022.

But, Scotia said, there are new cracks emerging. It noted private pension assets largely flatlined for the first time ever with a serious contraction in employee-sponsored pension assets, masked by otherwise exceptional financial asset gains. It also noted lifetime renters also continue to confront compounding vulnerabilities, though the statistical agency notes more young households are amassing wealth outside home ownership.

"Sentiment remains weak and these data points are not going to tip the balance. Nor are they likely to repeat given exceptional pandemic related drivers behind the broad based gains," Scotia said, before adding, "Policymakers should double-down on fixing the cracks — not plastering the walls — while reinforcing the foundational drivers of sustainable wealth creation."

Consumer stocks were mixed late Tuesday afternoon, with the Consumer Staples Select Sector SPDR Fund (XLP) increasing 0.3% and the Consumer Discretionary Select Sector SPDR Fund (XLY) falling 1.2%.

Redbook US same-store sales last week rose 4.8% from a year earlier, below the 6% increase in the previous week.

In corporate news, Live Nation shares jumped 4.5%, a day after the company reported strong demand in the current quarter and into 2025 for its Ticketmaster sales segment.

TreeHouse Foods shares tumbled past 13%. The company lowered its full-year core profitability outlook on Tuesday as its Q3 results trailed market expectations amid a product recall and volume declines.

Shopify shares surged 22% after its Q3 revenue increased more than Wall Street's expectations amid double-digit gross merchandise volume gains.

Tyson Foods surpassed top- and bottom-line expectations for its fiscal Q4 on Tuesday, while it issued guidance implying a slight cooldown in sales in the new year amid ongoing uncertainties with its beef business. Its shares popped past 6%.