US Market Reaction On Dec-12; Dow Jones, S&P 500, Nasdaq Fall On Hot Inflation, Trump's Tariff Risks

The US market pulled back sharply from its record rally on Thursday, December 12, 2024. Dow Jones, S&P 500 and Nasdaq Composite ended lower by 0.5% to 1%. Investors' bearish sentiment was fuelled by hotter-than-expected US inflation data, while experts believe that Trump's tariffs and policies in 2025 could dampen another rate cut from Federal Reserve. Meanwhile, the market awaits FOMC's comments during the December policy that will be announced next week, where a 25 bps rate cut is projected despite hot CPI.

Morningstar reported that Paris-based BNP Paribas in its 2025 Global Outlook report said, the ramifications of taking Trump at his word are that a U.S. economy poised for a soft landing in early 2025 may end up stalling into 2026 as the incoming president's tariff and immigration policies take hold, outweighing his pro-growth initiatives.

Further, BNP's note said, it expects market participants to begin pricing in higher U.S. inflation and fewer Fed rate cuts than they currently are.

US CPI inflation rose hotter than expected to 2.7% in November 2024, the highest level in seven months. Also, the country's annual PPI inflation surpassed market estimates to reach 3% in November. This has pushed the dollar currency to around 106.50 level.

US Market On December 12:

Dow Jones: The Dow Jones Industrial Average or DJIA index dipped by 234.44 points or 0.53% to end at 43,914.12.

S&P 500: This index slipped by 32.94 points or 0.54% to close at 6,051.25.

Nasdaq Composite: The tech-heavy index was down by 132.05 points or 0.66% to finish at 19,902.84.

Trading Economics data said the S&P 500 and Nasdaq each closed 0.6% lower on Thursday as a hotter-than-expected U.S. inflation report weighed on market sentiment, with technology shares leading the decline. November's producer price index rose 0.4%, doubling forecasts of 0.2%, underscoring slow progress toward the Federal Reserve's 2% inflation target.

Further, its data added that the Dow Jones Industrial Average dropped 234 points, driven by a 3.3% decline in UnitedHealth Group, whose shares have plummeted 14% since the death of its healthcare unit CEO. Other blue-chip stocks, including Caterpillar (-2.1%), Home Depot (-1.7%), and Sherwin-Williams (-1.5%), also suffered losses. Among the tech leaders, Nvidia fell 1.4%, and Adobe plunged 13.6% after issuing a weaker-than-expected 2025 outlook. While markets remain near record highs, these declines highlight growing investor caution amid uneven sector performance and persistent economic uncertainty as the year-end nears.