Investing.com – Wall Street traded lower on Tuesday, pulling back from record highs despite generally positive economic data, as investors looked ahead to U.S. President Donald Trump’s first address to a joint session of Congress.
At 11:22AM ET (16:22GMT), the Dow Jones dropped 2 points, or 0.01%, the S&P 500 lost 2 points, or 0.10%, while the Nasdaq Composite fell 14 points, or 0.23%.
Trump will make his first major address to Congress on Tuesday at 9:00PM ET (02:00GMT Wednesday), with investors hoping he will shed light on his promises of tax reform and infrastructure spending.
Market players will also be eager to learn more about Trump's plans for repealing the Affordable Care Act and reducing regulations on businesses.
White House budget officials told reporters Monday that Trump's first budget will call for a $54 billion increase in defense spending and a corresponding cut in what his administration deems lower priority programs.
In an interview earlier on Tuesday, Trump told Fox News that the U.S. would get more defense products for their buck and that he thought some of the money for the $54 billion increase would come from a “revved up economy”.
With regard to the address to Congress, economists from ING said that “the devil is the detail, but confirmation that spending stimulus is on its way in this budget could be enough to refuel reflationary hopes.”
These economists outlined possible remarks from Trump that could increase the odds of a March rate hike from the Federal Reserve (Fed). Among these, they mentioned tentative figures of a reduction in corporate taxes to around 20%, that his infrastructure spending will be introduced into the 2017/2018 budget or that he outlines credible revenue generating policies.
According to these experts, the downside risks from the appearance are that “investors will check the revenue neutrality of Trump’s promises, while strong protectionist rhetoric won’t be well received.”
Economic data out on Tuesday was mostly positive with the exception of fourth quarter gross domestic product (GDP) which was left unrevised at 1.9%, while consensus had expected an upward adjustment to 2.1%.
In a bright light among the revised data, consumer spending jumped 3.0%, compared to expectations for the 2.5% rise to remain unchanged and the Conference Board’s consumer confidence for February also gave a positive sign as it hit a two-year high.
In a separate report, the Institute for Supply Management (ISM) said its Chicago purchasing managers’ index increased by 7.1 points to a seasonally adjusted 57.4 this month from a reading of 50.3 in January. That was its highest level since January 2015.
A similar reading from the Richmond Fed also saw manufacturing activity pop during the same month.
Despite the positive balance to the data, especially the more recent numbers, the dollar remained under pressure in extremely choppy trade that some experts attributed to end-of-the-month positioning as well as nerves ahead of Trump’s appearance.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.24% to 100.90 by 11:23AM ET (16:23GMT).
In earnings news, Target (NYSE:TGT) crashed more than 11%, leading the decliners on the S&P 500, as the second largest U.S. retailer missed forecasts on both the top and bottom line, while saying it estimated it will earn $3.80 to $4.20 a share in its current fiscal year, compared to consensus expectations of $5.37.
Shares in Perrigo saw similar losses and was the second biggest decliner as the drug maker also gave a disappointing outlook.
On the upside, Albemarle and Priceline.com (NASDAQ:PCLN) were the biggest advancers on the benchmark index after reporting quarterly results that beat expectations.
Meanwhile, oil prices pulled back on Tuesday, as investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products.
Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (21:30GMT) later on Tuesday. Official data from the Energy Information Administration will be released Wednesday, amid forecasts for an oil-stock rise of 2.9 million barrels.
U.S. crude futures lost 1.44% to $53.27 by 11:23AM ET (16:23GMT), while Brent oil traded down 1.19% to $55.75.