Market Snapshot: Dow ends lower for 3rd of 4 sessions, as downturn in oil weighs on stock market

U.S. stock benchmarks finished lower, but off their intraday lows, on Tuesday, with Wall Street slumping in the face of uncertainty around efforts to overhaul tax policy and a downturn in crude-oil futures.

Read: Fed’s Yellen: It’s confusing with so many voices on the FOMC

What did the main benchmarks do?

The Dow Jones Industrial Average DJIA, -0.13% traded off 30.23 points, or 0.1%, to 23,409, but the blue-chip gauge had been down by as much as about 170 points on the session. Declines in shares of Goldman Sachs Group Inc. GS, -1.26%  , Apple Inc. AAPL, -1.51% Walt Disney Co. DIS, -1.50% and DowDuPont Inc. DWDP, -2.15% dragged the average lower.

The S&P 500 index SPX, -0.23%  fell 5.97 points, or 0.2%, at 2,578.87, with only the utilities and consumer-staples sectors, considered defensive plays, punching markedly higher. Energy and materials were among the sharpest losses, down 1.5% and 1.1% respectively, as the International Energy Agency said the oil-price rally may be ephemeral. The telecommunications sector, meanwhile, finished 1.4% lower.

Meanwhile, the Nasdaq Composite Index COMP, -0.29% dipped 19.72 points, 0.3%, to 6,737.87.

The Dow and S&P 500 have finished in negative territory for three out of the past four trading sessions, suggesting that a run to records may be cooling somewhat as investors fret about tax reform and equity valuations.

Read: Stock-market investors are careening ‘ever closer to the sun’, warns strategist

Need to know: The S&P 500 has been in the black all year—here’s what typically happens next

What drove markets?

Concerns about delays in much-anticipated corporate tax cuts out of Washington have been acting as a drag on stocks.

Massachusetts Democratic Sen. Elizabeth Warren on Tuesday said that the Republican tax plan will force small-business owners to subsidize big corporations and will harm the U.S. economy by reducing tax revenue for infrastructure that supports economic growth.

Meanwhile, the Wall Street Journal reported that Mohamed El-Erian, chief economic adviser at Allianz, is being considered for the No. 2 role at the Federal Reserve. President Donald Trump nominated Fed. Gov. Jerome Powell to replace Chairwoman Janet Yellen when her term as Fed boss ends in February.

What did strategists say?

“‘Buy the dip’ mentality has been in play throughout the year, especially because many investors don’t want to miss the opportunity of a potential rally when the U.S. lowers the corporate tax rate, however, the sharp differences between the House and the Senate suggest there are still many barriers to overcome,” Hussein Sayed, chief market strategist at FXTM, said in a note to clients.

“Overstretched valuations, tighter monetary policies, geopolitical risks, a slowdown and high debt levels in China, and low inflation are some of the factors that could potentially trigger a market correction. However, all of these warnings are being ignored, and stocks continue to score new highs,” said Sayed.

“This is just a two-steps-forward, one-step-back kind of dance, and I just think that we are seeing that one step back,” said Crista Huff, chief analyst at Cabot Undervalued Stocks Advisor. “It’s perfectly natural” to have the markets pull back, she said. Huff said the trend, however, has been “incredibly bullish.”

J.J. Kinahan, chief strategist at TD Ameritrade, said Wall Street is more sensitive absent other major catalysts as third-quarter earnings have nearly concluded. “The tax bill becomes a point to make people unsettled especially at a time where we are not having a ton of news outside of that,” he said.

Which stocks were in focus?

Buffalo Wild Wings Inc. BWLD, +23.97% shares ended up 24% as The Wall Street Journal reported on Monday that a private-equity firm had bid more than $2.3 billion for the restaurant chain.

Advance Auto Parts Inc. AAP, +16.33%  shares rose more than 16% after reporting a profit beat that offset a sales miss.

Dick’s Sporting Goods Inc. DKS, -2.77%  fell 2.8% after results that included a weak 2018 outlook.

General Electric Co. GE, -5.89%  extended Monday’s downturn amid its restructuring under new CEO John Flannery. The Dow component led the index lower, in percentage terms, for a second straight session. Shares were down 5.9%.

Home Depot Inc. HD, +1.64% shares gained 1.6%. The home-improvement giant reported third-quarter earnings that beat analysts’ estimates and increased its guidance for the year partly because of hurricane-related business.

TJX Cos., TJX, -3.99%  fell 4% after the off-price retailer reported third-quarter revenue and same-store sales that fell below consensus.

What did the data and Fed speakers say?

The National Federation of Independent Business said its optimism index rose to 103.8 in October from 103.

A reading for producer prices in October showed a rise of 0.4%, topping expectations of an increase of 0.1% from economists polled by MarketWatch.

Raphael Bostic, the president of the Atlanta Fed, said he supported a gradual increase to rates, contingent on the strength of the economy. Bostic isn’t a voting member of the Fed.

San Francisco Fed President Jim Bullard, a nonvoting member, said there was no need to lift interest rates. Dallas Fed President Robert Kaplan, a voting member, said he was “actively considering” his support for another rate increase in December.

Check out: MarketWatch’s Economic Calendar

What are other assets doing?

European stocks SXXP, -0.59% logged a sixth day of losses, as the euro climbed. Asian markets were mostly lower, led by a sharp decline in Australian stocks XJO, -0.88% and not helped by news that China industrial production fell in October.

Gold futures GCZ7, +0.11%  settled higher, up 0.3% at $1,282.90 an ounce, while U.S.-traded oil futures CLZ7, -3.10%  tumbled to a more than one-week low, off $1.06, or 1.9%, at $55.70 a barrel.

The ICE U.S. Dollar Index DXY, -0.73% hit a three-week nadir, down 0.7% at 94.135. The British pound GBPUSD, -0.0456%  fell against the dollar on news of weaker-than-expected U.K. inflation.

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