Stocks drifted lower as investors paused after the recent rally

Stocks were hit by tumbling commodity prices.

United States

Stock indices were lower Tuesday with General Electric tumbling for the second straight day and a drop in crude oil prices hit energy stocks. The Dow Jones industrials were down 0.1 percent, the S&P declined 0.2 percent and the Nasdaq was 0.3 percent lower. The market is taking a breather after its rally to record highs last week. Tax reform also continued to dominate market attention.

GE was on track to record its worst two-day fall since 2009 after its new chief executive on Monday outlined steps to turn it into a smaller, more focused company, surprising some investors. Exxon and ConocoPhillips declined along with crude oil prices. Copper miner Freeport-McMoRan declined after metal prices retreated in the wake of slower growth in China. Home Depot was unchanged. TJX was lower after its quarterly reports that bore the impact of the US hurricane season. Advance Auto Parts rallied after the auto parts retailer affirmed full-year profit forecast and beat quarterly profit estimates.

Fed Chair Janet Yellen participated in a four person panel which included Bank of England Governor Mark Carney, ECB President Mario Draghi and Bank of Japan Chief Haruhiko Kuroda in Frankfurt. The discussion focused on central bank communication. Ms Yellen said that US Federal Reserve’s guidance about its likely future policy path is beneficial but should always be viewed as conditional on how the economy actually develops. “All guidance should be conditional and related to the outlook for the economy.”

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$3.35 to US$1,274.60. Copper futures were down 2.0 percent to US$3.05. WTI spot crude was down US$1.48 to US$55.28. Dated Brent spot crude was down US$1.45 to US$61.71. The US dollar was down against the yen, euro, pound and Swiss franc. It was unchanged against the Canadian and the Australian dollars. The Dollar Index was down 0.7 percent. The yield on the US Treasury 30 year bond was down 4 basis points to 2.87 percent while the 10 year note was down 2 basis points to 2.38 percent.

European markets

European stocks retreated Tuesday with exporters under pressure because of an increase in the value of the euro. The FTSE slipped 0.76 point, the CAC was down 0.5 percent, the DAX declined 0.3 percent and the SMI was 0.4 percent lower. The euro was driven higher by the release of some better than expected German economic data.

According to European Central Bank President Mario Draghi, forward guidance has evolved into a full-fledged monetary policy tool and has been successful. Speaking at the ECB's first conference on central bank communication Draghi said, "Forward guidance was initially protective and not proactive, and it worked." He was part a four-member panel, which included US Fed Chair Janet Yellen, Bank of England Governor Mark Carney and Bank of Japan Chief Haruhiko Kuroda, discussing central bank communication.

Manz rallied after the high-tech equipment manufacturer affirmed its fiscal year revenue outlook after narrowing its nine-month loss. Bilfinger rallied after the engineering services firm posted its first organic rise in output volume after three years of decline. Infineon Technologies climbed after lifting its dividend and saying it expects year-on-year revenue growth of about 9 percent, plus or minus 2 percentage points, for the 2018 fiscal year. Henkel retreated after the company warned of difficult conditions in the consumer goods market and said "currency effects will have an increasingly negative impact."

Alstom advanced after reporting a surge in first-half profit and affirming its 2020 outlook. Tesco advanced. Its £3.7 billion takeover of cash-and-carry group Booker has been provisionally cleared by the competition regulator. Booker also soared. Vodafone gained after a positive trading update. Bovis Homes rose after a bullish trading update. Credit Suisse was higher in Zurich after it agreed to pay $135 million to resolve currency-manipulation allegations by US authorities. Swiss Life, Swiss Re and Zurich Insurance declined. Altice tumbled on a broker downgrade.

Several preliminary third quarter gross domestic product were released. In Germany GDP increased a quarterly 0.8 percent and 2.8 percent on the year. In Italy, GDP increased 0.5 percent and 1.8 percent. And for the eurozone, GDP was up 0.6 percent and 2.5 percent on the year. November ZEW found a slight improvement in analysts' views about the German economic situation this month. Current conditions weighed in at 88.8, up from 87.0 in October and a new post-Great Recession high. Expectations advanced a smaller 1.1 points to 18.7, their third increase in as many months and their best reading since May. In the UK, October CPI was 0.1 percent higher on the month and up 3.0 percent from a year ago.

Asia Pacific

Stocks declined Tuesday thanks to disappointing Chinese economic data and uncertainty lingered over US tax policy.

The Shanghai Composite index dropped 0.5 after a slew of data indicated that the economy cooled further last month. The Hang Seng slipped 0.1 percent. China's industrial production and retail sales growth decelerated in October and property investment cooled, as measures taken to curb excessive debt and factory pollution weighed on activity. Industrial output was up an annual 6.2 percent, down from the 6.6 percent in September. Retail sales growth eased to 10 percent from 10.3 percent on the year while fixed asset investment climbed 7.3 percent compared to a 7.5 percent increase for the year to date. Bank lending and property investment growth figures also disappointed investors.

The Nikkei was down 0.98 point while the Topix lost 0.3 percent. SoftBank declined after the tech giant said there is a possibility it may not make an investment in ride-hailing service Uber.

The S&P/ASX lost 0.9 percent while the All Ordinaries were 0.8 percent lower. The indices were dragged down by energy stocks after Royal Dutch Shell said it would sell 71.6 million shares in Woodside Petroleum at a 3.5 percent discount to Monday's closing price. Woodside Petroleum shares declined along with Origin Energy, Santos, Oil Search and Beach Energy. Retailer Harvey Norman declined ahead of Amazon's formal launch of 'marketplace' service in the country. The four big banks all declined while miners BHP Billiton and Rio Tinto were lower.

The Kospi was 0.1 percent lower while the Sensex dropped 0.3 percent. India's consumer inflation climbed to 3.58 percent in October, the fastest pace in seven months from 3.28 percent increase in September.

Looking forward

Japan posts initial estimate of third quarter gross domestic product. The UK releases its October labour market report. Eurozone report September merchandise trade data. In the US, October consumer price index, retail sales, September business inventories and November Empire State manufacturing survey will be released.

Global Stock Markets

Global Stock Markets

Note — all releases are listed in local time.