S&P 500 snaps 5-day winning streak after Fed minutes as investors eye Nvidia earnings

By Frances Yue and Andrew Keshner

U.S. stocks ended lower Tuesday, with the November rally stalling after a mixed bag of retailer earnings as investors awaited results from AI chipmaker Nvidia and posted little reaction to minutes of the Federal Reserve's last policy meeting.

How stocks traded

The Dow Jones Industrial Average DJIA fell 62.75 points or 0.2% to end at 35,088.29The S&P 500 SPX declined 9.19 points or 0.2% to finish at 4,538.19, snapping a five-day winning streak The Nasdaq Composite COMP lost 84.55 points or 0.6% to 14199.98, breaking a five-day winning streak

Stocks have rallied in November, with the S&P 500 exiting correction territory on Wednesday to finish less than 1% away from its 2023 closing high.

What drove markets

Stocks ended lower after the release of minutes from the Fed's Oct. 31-Nov. 1 policy meeting, which showed officials were concerned a strong U.S. economy could cause inflation to reaccelerate but did nothing to dissuade investors that the central bank's next move will be a rate cut next year.

"Today's sluggish market is more a function of a short-term overbought market, rather than a market that believes it misinterpreted the Fed," said Quincy Krosby, chief global strategist for LPL Financial, in a note.

"Still, the market believes that the Fed is finished and that the economy will require help with rate cuts in 2024, regardless of the Fed's messaging," she said.

Investors adopted a more cautious stance ahead of potentially market-moving results from AI chipmaker Nvidia (NVDA). They're also digesting earnings results from retailers to get a peek at consumer spending going into the holiday season.

The S&P 500, Wall Street's equity benchmark, snapped a five day winning streak, having risen 14 of the last 17 sessions. It still sits close to four-month highs, taking its gains for November to 7.4% and its advance so far in 2023 to 18.2%.

With the tech-focused Nasdaq 100 leading the way with an over 46% surge for 2023, and hovering only 3% or so below the record high touched two years ago, traders therefore are on tenterhooks to see how Nvidia, the index's fourth biggest constituent, behaves after its results are released following Tuesday's closing bell.

Read: Nvidia stock options ready for some fireworks after earnings

Meanwhile, retailers have offered a mixed back of results, with signs of strength and also pocket of softness.

"Consumers are losing spending steam, a reality that will weigh on holiday sales this season," according to a Moody's Investors Service note Monday. The note is projecting a "fairly modest" growth in 1%-3% holiday sales, compared to 5.1% sales growth last year, according to the authors including Chedly Louis, vice president- senior credit officer.

Existing-home sales fell 4.1% in October to a seasonally adjusted annual rate of 3.79 million, the National Association of Realtors said Tuesday. Sales are down 14.6% from a year ago. Economists polled by MarketWatch had projected existing-home sales to come in at a 3.9 million rate.

U.S. markets will be closed Thursday for the Thanksgiving Day holiday. Stock and bond markets will close early on Friday.

Companies in focus

Abercrombie & Fitch Co. ANF stock rose 2.4% after the clothing retailer posted better-than-expected third-quarter earnings and raised its guidance, after a strong back-to-school season for its Hollister brand.Dick's Sporting Goods Inc.'s stock DKS was up 2.2% after the retailer beat Wall Street's third-quarter profit estimate and raised its outlook for 2023.Kohl's Corp. KSS shares dropped 8.6%, after the department store chain beat profit expectations but missed on same-store sales and trimmed its full-year revenue outlook.Best Buy Co. Inc.'s BBY stock was down 0.7%, after the electronics retailer posted weaker-than-expected third-quarter revenue and lowered guidance to reflect a choppy and uncertain environment.Lowe's Cos. Inc. LOW shares lost 3.1% after the home-improvement company trimmed its full-year outlook and called out pressure on discretionary spending.

-Frances Yue -Andrew Keshner

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11-21-23 1628ET

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