The S&P 500 hovered near a record high on Tuesday, pausing ahead of the key Federal Reserve decision slated for Wednesday.
The Dow Jones Industrial Average rose just 20 points. The S&P 500 added 0.07% and the tech-focused Nasdaq Composite fell 0.1%. All three averages closed at all-time highs on Monday. The Russell 2000 opened within striking distance of its record, after popping 2.6% on Monday.
Tesla shares cooled off Tuesday after popping during the end of October. Shares of the electric automaker tumbled 5%, though they are up more than 50% over just the past month. The drop follows a report that the carmaker is recalling 11,700 of its vehicles due to a communications error, and a tweet from company founder Elon Musk that Tesla has yet to sign a contract with rental giant Hertz.
Pfizer shares rose 3.5% after the drug maker’s third-quarter profit topped expectations. It also raised its 2021 revenue and EPS outlook.
All three major U.S. stock indexes hit new intraday highs and closed at records during Monday’s regular session as investors continue to bet on a year-end rally despite supply chain issues, Covid risk and a Federal Reserve that’s about to indicate it’s going to pull back on some stimulus. The Fed’s two-day meeting begins Tuesday.
The S&P 500 has averaged gains of 1.1% in November and 2.3% in December since 1936, notes Bank of America. The final month of the year is in the green 79% of the time, the firm notes. However, Bank of America is cautious.
“We continue to see downside risks ahead,” wrote Savita Subramanian, the bank’s head of U.S. equity and quantitative strategy. “Despite a strong 7% beat, 2021-22 EPS remains largely unchanged, suggesting the upward revision cycle has likely peaked.”
The Fed at the conclusion of its two-day meeting on Wednesday is expected to announce it will begin unwinding its $120 billion in monthly bond purchases implemented during the pandemic.
The October jobs report is on Friday.
“The November FOMC meeting, October payrolls…and a host of earnings updates sets up a catalyst heavy week of trading ahead,” Goldman Sachs’ Chris Hussey said in a note.
Better-than-expected corporate earnings results boosted the U.S. stock averages to finish October at record highs, with the S&P 500 and Nasdaq posting their best months since November 2020.
As of Monday evening according to FactSet, 55.8% of S&P 500 companies have reported quarterly financial results, with 82% beating earnings estimates.