Wall Street Slips to Start 2024

NEW YORK (AP) -- Wall Street is starting 2024 weakly on Tuesday and giving back some of its powerful gains from the year before.

The S&P 500 was 0.7% lower in morning trading after pulling to the brink of its all-time high set roughly two years ago. The Dow Jones Industrial Average was down 56 points, or 0.1%, as of 9:50 a.m. Eastern time, and the Nasdaq composite was 1.5% lower.

Some of last year's biggest winners were slipping the most, including a 3.1% drop for Apple. Tesla, another one of the "Magnificent 7" Big Tech stocks that drove much of Wall Street's gains last year, slipped 0.3% after reporting its deliveries and production for the end of 2024.

Much of Wall Street had been preparing for at least a pause in the big rally that carried the S&P 500 to nine straight winning weeks and within 0.6% of its record. That big surge came on rising hopes the Federal Reserve may have engineered a perfect escape from high inflation: one where high interest rates slow the economy enough to cool inflation but not so much that they cause a painful recession.

Now, the hope is that the Fed will shift sharply in 2024 and cut interest rates several times. Cuts can relax the pressure on the economy and boost prices for investments. But even though such hopes are high, it's still not assured. And prices for stocks and bonds have already rallied hard on expectations for them.

Treasury yields in the bond market also regressed a bit on Tuesday following their big moves since autumn. The yield on the 10-year Treasury rose to 3.95% from 3.87% late Friday.

A report showed that the U.S. manufacturing industry may be even weaker than thought. It contracted by more last month than an earlier, preliminary reading indicated, according to S&P Global, as new sales dropped because of weakness both abroad and at home. Business confidence, though, did pick up to a three-month high.

More high-profile reports will arrive later this week. On Wednesday, the Federal Reserve will release the minutes from its last policy meeting, one that sparked hopes for a series of rate cuts coming this year. Friday will bring the U.S. government's monthly tally of job growth across the country.

In stock markets abroad, indexes fell 1.5% in Hong Kong and 0.4% in Shanghai amid worries about the Chinese manufacturing and property sectors.

South Korea's Kospi gained 0.5%, but indexes were lower across much of Europe. Japan's markets were closed for a holiday.