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Gold futures reach $4,000/oz; S&P 500 declines after recent record highs

The major stock indexes declined on Tuesday. The S&P 500 eased after recent record-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.

Demand for Safe-haven

The uncertainty surrounding the U.S. government shutdown and expectations of another U.S. rate cut have contributed to this increase. U.S. Gold futures for delivery in December settled at $4.004.4, an increase of 0.7%. Investors waited for developments in France where the shocking resignation of Sebastien lecornu as Prime Minister on Monday caused concern about France's fiscal outlook. Despite the ongoing U.S. shutdown, major U.S. indexes have been closing at record highs. This optimism is due to the possibility of Federal Reserve rate cuts and the artificial intelligence dealmaking. Jake Dollarhide is the chief executive officer at Longbow Asset Management, located in Tulsa. He said that with tech stocks, stocks, and gold at record highs, "something has to give."

"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 147.37, or 0.31 %, to 46.548.47. The S&P 500 declined 28.65, or 0.43 %, to 6,711.63 while the Nasdaq Composite lost 158.71, or 0.69 %, to 22782.96.

Tesla shares were down by 4.1%, the largest drag on both the S&P 500 index and the Nasdaq index. The company had unveiled cheaper versions of the Model Y SUV as well as its Model 3 sedan. This was done to counter falling sales and waning share of the market.

Consumer discretionary led the way with a drop of more than 1%. IBM shares rose 1.6% following the announcement of a partnership between Anthropic, a startup in artificial intelligence.

The MSCI index of global stocks fell by 4.64 points or 0.47% to 91.42.

The STOXX 600 Index fell by 0.17%.

Blue-chip French stocks

Closed flat after giving up gains

After a sharp sell-off Monday, triggered by Lecornu’s abrupt resignation. Lecornu, who faces increasing pressure from the President Emmanuel Macron to call snap parliamentary election or resign, was given the opportunity to have last-ditch discussions with various party members on Tuesday in order to find a solution to this crisis.

The yields on French bonds rose by 2 basis points, to 3.59%. Investors in Japan snapped up government debt in an indication of lessening nervousness following the election of Sanae Takaichi as leader of the ruling Party. Takaichi is a supporter of low interest rates and large spending. This led to a drop in the value of domestic bonds, the currency, and sent stocks to record highs.

The Japanese yen fell 1.02% to 151.89 dollars, while the euro dropped 0.43% to $1.1659.

Benchmark U.S. yields are on the decline

Investors waited

Further comments from Fed policymakers before the U.S. Central bank's meeting in late this month. The yield on the benchmark U.S. 10 year notes dropped 3.7 basis points from late Monday to 4.125%.

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

The oil price was little changed. A smaller-than-expected increase to OPEC+ output in November was

Offset by signs

A possible glut of supply is a concern.

U.S. crude oil rose by 4 cents, settling at $61.73 per barrel. Brent dropped 2 cents, settling at $65.45. Investors digested the news that the World Bank raised its growth forecasts for China in 2025, as well as those for most of the region. However, it warned about a slowdown next year.

(source: Reuters)