Support that has helped buoy the S&P 500 index futures for the first half of December ultimately gave out during Wednesday’s session. And in a major way.
For most of the overnight session, the bulls were able to make progress towards Tuesday’s high but the rally was cut short at 8:30am EST. At that time, November’s housing starts data came in slightly under expectations and building permits came in somewhat above expectations. It seemed that was all it took to spook investors, quickly erasing about 20 handles of gains and dipping into the red by the open.
Following the opening bell, buy-the-dippers showed up and swiftly brought the index futures back up to meet the premarket high. Unfortunately, resistance held firm in that area as market participants cautiously awaited the rate-cut announcement. At 2:00pm EST, the Fed announced a 25 bps cut to the key overnight rate, which was within expectations. That wasn’t enough to spur the bulls to hold support and sellers initiated the biggest selloff since September 2022. Amongst the rate-cut news and following press conference by Fed Chair Powell, the Fed’s latest dot plot signalled only two potential 25 bps cuts in 2025, which was fewer than expected. In the index futures, the weekly low was taken out without much resistance at all, and once the front month contract breached the 6000 level, the pace of the selloff quickened.
As the decline progressed, some support was found just before the close near the November 19 low. However, buyers were unable to pare back the losses by the closing bell. The session concluded near the day’s low at 5872.25, marking a swoon of 181.50 handles. Continuing the selloff into after hours trading, bears were able to extend the day’s range to 240+ handles.
There were no winners amongst top components of the index, making NVIDIA Corp (NASDAQ: NVDA) the smallest loser. The chip designer declined by $1.48 or 1.14% to close at $128.91 for the day.
That performance was nearly two percent better than the cash index’s decline of 2.98%.
Flipping its role from Tuesday, the biggest loser was Tesla Inc (NASDAQ: TSLA). For the day, the EV maker declined by $39.73 or 8.28% to close at $440.13.
