The roaring rally in US stocks lost steam on Tuesday as investors assessed whether buying has been overdone and what President-elect Donald Trump's Cabinet picks mean for policy.
The Dow Jones Industrial Average (^DJI) slid about 0.6%, or roughly 250 points. The S&P 500 (^GSPC) fell almost 0.4%, and the tech-heavy Nasdaq Composite (^IXIC) slipped 0.2%. Boeing (BA) was a laggard in the Dow, falling as much as 3%, as the company posted sharp declines in October due to worker strikes.
The breather in equities came as Treasury yields ticked higher. The 10-year Treasury yield (^TNX) added about 13 basis points to hit about 4.43%.
Wall Street analysts are signaling that the post-election surge in stocks could soon sputter after lifting the major gauges to record highs. Investors have raised their exposure to US stocks to an 11-year high, Bank of America found, and those bullish bets lay the ground for profit taking, Citi strategists said.
At the same time, the market is pondering the policy impact of Trump's likely Cabinet picks. Florida Sen. Marco Rubio has been tapped for secretary of state, joining other high-profile China hawks on the team. The prospect of tougher tariffs dragged on Chinese stocks and gave weight to worries that the next president's economic plans could spur inflation.
Focus is starting to turn to Wednesday's report on the Consumer Price Index for October, which will be watched for signs that inflation is cooling as the Federal Reserve desires.