The roaring rally in US stocks lost steam on Tuesday as investors assessed whether buying has been overdone and what President-elect Donald Trump's Cabinet picks mean for policy.
The Dow Jones Industrial Average ( ^DJI ) slid nearly 0.8%, or almost 350 points. The S&P 500 ( ^GSPC ) fell more than 0.2%, and the tech-heavy Nasdaq Composite ( ^IXIC ) was down roughly 0.1%, paring earlier losses.
Boeing ( BA ) was a laggard in the Dow, falling more than 2.5%, as the company posted sharp declines in October due to worker strikes. Both the S&P 500 and Dow had their worst day since Oct. 31.
The breather in equities came as Treasury yields ticked higher. The 10-year Treasury yield ( ^TNX ) added about 12 basis points to hit about 4.43%.
Wall Street analysts are signaling that the post-election surge in stocks could soon sputter after lifting the major gauges to record highs. Investors have raised their exposure to US stocks to an 11-year high , Bank of America found, and those bullish bets lay the ground for profit taking , Citi strategists said.
At the same time, the market is pondering the policy impact of Trump's likely Cabinet picks. Florida Sen. Marco Rubio has been tapped for secretary of state , joining other high-profile China hawks on the team. The prospect of tougher tariffs dragged on Chinese stocks and gave weight to worries that the next president's economic plans could spur inflation.
Bitcoin's ( BTC-USD ) record-breaking rally put the cryptocurrency within reach of touching $90,000 . But other "Trump trades" lost some fizz. Tesla's ( TSLA ) stock slipped into the red Tuesday after soaring thanks to CEO Elon Musk's alliance with the incoming president. Crypto-linked stocks Coinbase ( COIN ) struggled for gains after large increases over the past several sessions.
Focus now turns to Wednesday's report on the Consumer Price Index for October , which will be watched for signs that inflation is cooling as the Federal Reserve desires.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards