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Gold futures reach $4,000/oz; S&P 500 closes lower than recent records

The major stock indexes declined on Tuesday. The S&P 500 ended lower after recent records highs. Investors were looking at political turmoil in France, Japan, and the U.S. shutdown. Gold futures also hit $4,000 per ounce for the very first time.

The demand for gold as a safe haven has been driven by the uncertainty surrounding the U.S. shutdown and expectations of another U.S. rate cut. U.S. Gold futures for delivery in December settled at $4,004.4. This is a 0.7% increase. It is the seventh day of the shutdown. The euro dropped against the U.S. Dollar for the second day, as investors awaited the developments in France. On Monday, the shocking resignation of Sebastien lecornu raised concerns over the fiscal outlook of the country.

Tesla shares weighed on the S&P 500 & Nasdaq on Tuesday after the company announced more affordable versions its best-selling Model Y & Model 3 SUVs and sedans. The electric-vehicle manufacturer is trying to reverse declining sales and waning share of the market. Consumer discretionary fell 1.4%, leading all S&P 500 sector declines.

The Federal Reserve is expected to cut rates and artificial intelligence will be a major factor in the future of the U.S. economy.

Jake Dollarhide is the chief executive officer at Longbow Asset Management, located in Tulsa.

"Are those nervous Nellies in gold right or is the AI trading correct?" This is what we will find out over the coming weeks and months.

The Dow Jones Industrial Average dropped 91.99 points or 0.20% to 46,602.98, while the S&P 500 declined 25.69 points or 0.38% to 6,714.59, and the Nasdaq Composite was down 153.30 or 0.67% to 22,788.36.

Tesla shares closed 4.4% lower.

If you take a look at the stock price of Tesla since April 2, this is a complete U turn. Art Hogan is the chief market strategist of B. Riley Wealth, New York.

IBM shares rose 1.5% among gainers after the company announced its partnership with AI startup Anthropic.

The MSCI index of global stocks fell 3.93 points or 0.39% to 992.13.

The pan-European STOXX 600 fell by 0.17%. The blue-chip French stocks lost their gains and closed flat on Tuesday after Monday's sharp selloff triggered by Lecornu’s abrupt resignation.

Emmanuel Macron, France's president, was under increasing pressure to resign and/or call a snap parliamentary vote to end the political turmoil which has seen five prime ministers resign in less than two year. Lecornu held a last-ditch meeting to form a government on Tuesday.

The yield on French bonds rose by 2 basis points, to 3.59%.

Investors in Japan snapped up government debt in a sign that they were easing their nerves after Sanae Takaichi was elected as the leader of the ruling Party. Takaichi is a supporter of low interest rates and large spending. This led to a selloff of domestic bonds, the currency, and sent stocks to new highs.

The Japanese yen fell 1.05% to 151.95 dollars, while the euro dropped 0.47% to $1.1655.

Investors remained confident that the Fed would cut rates during its next meeting, which is why benchmark U.S. yields dipped. The yield on the benchmark 10-year U.S. notes dropped 3.5 basis points, to 4.127% from 4.162% at late Monday.

Investors have been forced to rely on independent data and remarks by monetary policymakers to gauge the Fed's potential rate cuts.

A New York Federal Reserve Bank survey showed softening labor market expectations among consumers.

Prices of oil were not much different. A smaller-than-expected increase to OPEC+ output in November was offset by signs of a possible supply glut.

U.S. crude oil rose by 4 cents, settling at $61.73 per barrel. Brent dropped 2 cents, settling at $65.45.

(source: Reuters)