Although annual inflation fell compared to July, it didn’t fall as much as economists expected. That could give the Fed license to hike interest rates even faster and higher than forecast. The market is worried that hotter-than-expected inflation will prompt the Federal Reserve to raise interest rates more aggressively, inflicting serious damage to the US economy in the process.
- The forecast is for a year-over-year increase of 8.8% for overall producer prices and 7.1% over the past 12 months for core PPI, which excludes food and energy costs.
- US stocks tumbled on Tuesday, plunging from recent highs as investors digested a hotter-than-expected January inflation report that showed prices cooling slower than forecasts anticipated.
- With the other 29 names trading lower, the blue-chip average was down about 1.2%.
- In a larger sense, rate cuts signal to observers that the central bank is optimistic about its fight against high prices and confident that it can begin taking the brakes off of the economy, Cox added.
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But she still sees higher rates ahead as the Fed fights to get inflation back down to its 2% goal. Simon Property Group’s stock rose 1% Thursday before the bell following an upgrade to outperform from peer perform by Wolfe Research. Materials stocks were the second-largest losers, with the sector losing 2.1%. ConocoPhillips, Hess, Marathon Oil and Devon Energy all saw shares decline by more than 3.3%.
Arista Networks joined that parade after reporting stronger earnings and revenue for the latest quarter than expected. NEW YORK (AP) — U.S. stocks are falling Tuesday after worse-than-expected inflation data forced investors to question hopes that have sent Wall Street to record heights. Interest rate traders now see a 95% certainty the Fed will raise rates a quarter point to 5.25%-5.50% in less than threee weeks, at the July 26 meeting. Odds that rates will rise another quarter point, to 5.50%-5.75%, at the September meeting are now 28.5%, up from 18.1% Wednesday.
The Dow plummeted more than 1,050 points, or 3.3%, in late afternoon trading Tuesday. The S&P 500 and Nasdaq fared even worse, tumbling 3.6% and 4.5% respectively. The Treasury Department issued tens of billions of dollars of new debt.
Stock Market News Today, 02/05/24 – Indices Fall as Bond Yields Surge
Hasbro fell 5.4% after the toy company reported weaker results for the last three months of 2023 than analysts expected. The yield on the 2-year Treasury yield traded at 5.05% on Thursday, reaching levels not seen in 16 years, following the release of the latest ADP private payrolls report. It was also the first time March that the 2-year rate traded above 5%. Roughly 12 New York Stock Exchange-listed stocks fell for every advancer in early trading Thursday, as fears of even tighter Fed policy weighed on investor sentiment. All 12 sectors of the S&P 500 fell in the red during Thursday’s trading session, with the energy sector leading the losses. What the future of the U.S. economy will look like remains unclear following Thursday’s job data, according to Mark Hamrick, senior economic analyst at Bankrate.
Small cap stocks unperformed on Thursday, with the Russell 2000 last down more than 2.2% and on pace for its worst day since April 25. Gursky added that Textron’s valuation has already priced in a recessionary environment macd trend following strategy and reduced business jet demand. JetBlue Airways tumbled more than 7% a day after the company announced it would end its partnership in the northeast U.S. with American Airlines to focus on Spirit Airlines.
Food price spike is biggest since Sony debuted the Walkman
The Dow Jones Industrial Average soared to an all-time high this week, taking flight after the Federal Reserve signaled interest rate cuts next year. The world’s biggest bond market rebounded, with traders gearing up for a record $42 billion sale of 10-year Treasuries after a solid start to this week’s ramped-up issuance sizes. The Dow and S&P 500 are both on track to post their worst daily performances in more than a month with just hours left in Thursday’s session. “We are constructive on revenue and earnings visibility given recent backlog growth, particularly in the company’s Aviation and Bell segments,” analyst Jason Gursky wrote in a Wednesday note.
The Nasdaq Composite, which was on pace to close at new record earlier in the day, ended up falling 0.3% instead. The Dow Jones Industrial Average closed up 126 points, or 0.3%, setting a new record for itself. It has traded below its https://g-markets.net/ current record of 16,057.44 since Nov. 19, 2021. The Dow set a new record, but the Nasdaq Composite turned negative in early afternoon trading. “There will be a slowdown in the rate of economic growth, but no recession,” Sekera said.
U.S. stocks open lower after hotter-than-expected inflation data
If they continue to remain below those peaks, markets will have confidence that the Federal Reserve is indeed finished lifting short-term rates in its battle to cool inflation. Following a selloff that drove two-year yields to their highest since before the Fed’s December “pivot”, bonds climbed. A $54 billion sale of three-year notes drew solid demand, bolstering sentiment and making traders shrug off a slew of cautious remarks from Federal Reserve speakers. Megacaps were mixed, with Tesla Inc. up and Nvidia Corp. down. US-listed Chinese stocks rallied on bets the nation will be more forceful to prop up markets.
Slowing inflation could eventually lead to potential cuts to short-term interest rates by the Federal Reserve, leading to more growth on the way. The S&P 500 was 1.5% lower in afternoon trading as traders delayed their forecasts for when the Federal Reserve will deliver the cuts to interest rates they crave so much. The hotter-than-expected inflation report may have put the final nail into hopes that the first cut could arrive in March. It also pushed many forecasts past May into June, according to data from CME Group. The good news for the stock market is that yields remain below recent peaks.
Private payrolls surged 497,000 in June, ADP reports
For more on what’s driving bitcoin on Thursday read our full story here. With the other 29 names trading lower, the blue-chip average was down about 1.2%. For the week, the index is down 3% and headed for its worst weekly performance since March. The Dow was down 1%, while the S&P 500 and Nasdaq Composite slid 0.7%.
Australia’s May trade surplus climbs more than expected
The two-year Treasury yield, which moves more on expectations for the Fed, leaped to 4.61% from 4.47%. The figure also beat expectations of economists polled by Reuters, who expected the surplus to decline to AU$10.5 billion. May’s total was revised lower to 267,000, down 11,000 from the initial estimate. The Job Openings and Labor Turnover Survey showed that listings totaled 9.82 million, down from an upwardly revised 10.32 million the month before and below the FactSet estimate of 9.9 million. “The company’s aggressive growth plans and substantial operating leverage should allow strong margin expansion,” Bagri said.
Tepid demand for the issues pushed the prices lower, sending their yields higher. That comes even as yields across the Treasury curve rose, with the 10-year yield reaching just over 4.27% from a low for the day of just under 4.26%. The Russell 2000 was a standout during the afternoon, on track to close in positive territory for the year for the first time in 2024. The tech-heavy Nasdaq last reached a record close in November 2021. On the winning side of Wall Street, JetBlue Airways soared 19.9% after activist investor Carl Icahn disclosed he has built up an ownership stake in the airline and said he sees the stock as undervalued.
Sweetgreen shares rose 4% after Bank of America upgraded the stock to buy from neutral, citing increasing foot traffic, sustained momentum in same-store sales growth and long-term plans to automate operations. In other economic news, the U.S. trade deficit fell to $69 billion in May, just above the estimate. The Fed skips a meeting in October, but odds that rates will stand a half-point higher by the Nov. 1 meeting are now 40.1%, up from 31.6% Wednesday. There’s even 8.4% odds that rates will rise three quarters of a point by the end of the November meeting.
The CPI report is the highlight of this week’s economic data, giving investors their first major inflation report of the year. Retail sales and jobless claims data are due out later in the week. The days ahead will also feature earnings reports from Coca-Cola, Cisco Systems, and Deere. Already, the Fed has raised rates by a historic half point and then twice by three quarters of a point. Recently, non-tech stocks have taken the lead, as the economic outlook calls for more growth.
The report added that Goldman cited investor concerns over the the banks’ exposure to local government debt, earnings risk as well as diverging fortunes among individual banks. Hong Kong-listed shares of Chinese banks were among the leading decliners in the Hang Seng index after Goldman Sachs reportedly downgraded its ratings for the top mainland lenders. European equity markets are set to open marginally lower, according to IG data.
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