by Sinéad Carew and Lisa Pauline Mattackal

(Reuters) – The New York Stock Exchange ended lower on Tuesday, as investors prioritized profit-taking following the US presidential election, amid questions about the impact of Donald Trump’s future policies , and awaiting inflation data later this week.

The Dow Jones index fell 0.86%, or 382.15 points, to 43,910.98 points.

The broader S&P-500 lost 17.36 points, or 0.29%, to 5,983.99 points.

The Nasdaq Composite fell 17.36 points (0.09%) to 19,281.40 points.

While they jumped to records following the announcement of the electoral victory of Donald Trump, whose plans for tax cuts and removal of bureaucratic obstacles are considered profitable for stocks, the main indexes of Wall Street marked time on Tuesday.

Investor enthusiasm was dampened in part by concerns about the potentially harmful consequences for inflation and growth of the incoming Trump administration’s policies. In Europe, markets closed sharply after the European Central Bank (ECB) warned that the customs surcharges advocated by Donald Trump would harm global growth.

Several stocks expected to rise with the return of Donald Trump to the White House have lost part of the gains recorded in recent days, like Tesla, which fell by 6% during the session after having climbed by almost 40 % since the presidential election.

Rising bond yields also weighed on stocks.

“The 10-year US Treasury yield is something of a headwind. There are a bit of mixed signals, with investors celebrating growth initiatives while the equity market is holding on,” commented Jack Ablin, investment director of Cresset Capital.

“Between tariffs, tax cuts and immigration restrictions, there are inflationary pressures ahead that the bond market cannot ignore,” he added.

Noting that declines in overseas markets have put pressure on Wall Street, Russell Price, chief economist at Ameriprise Financial, said investors also favored profit-taking after record last days and before inflation data.

“When, at the opening, we already saw a certain decline compared to the recent strong increases, investors sought instead to make gains, in case the shares continued to fall,” he said. Investors are awaiting the release on Wednesday of the report on US consumer prices and then, later this week, producer prices and retail sales in the United States.

This inflation data, capable of providing clues on the continuation of the monetary policy of the Federal Reserve (Fed), represents a short-term risk for investments, declared Russell Price, adding that “it is very likely that this contributed to the day’s decline.”

Financial markets have already lowered their expectations for rate cuts for next year, between the strength of economic data and the possibility that Donald Trump’s policies will have an inflationary impact.

Richmond Fed President Thomas Barkin said Tuesday that the U.S. central bank was prepared to respond to any inflationary pressure or weakening of the labor market.

Among the major sectors of the S&P-100, materials and health care ended the session in the red, while communication services recorded the best performance with an increase of 0.5%.

On the value side, note, Novavax fell 6% after lowering its annual revenue forecast, citing lower-than-expected sales of COVID-19 vaccines. Honeywell rose 3.8% to a record after activist fund Elliott Investment said it held a stake of more than $5 billion in the industrial conglomerate.

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(Written by Jean Terzian)

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