Wall Street traders who had been worried about another disappointing inflation report took some comfort after the Federal Reserve’s preferred price gauge matched expectations.
Stocks closed at record highs as a rise in the consumer spending index strengthened expectations that the Federal Reserve could cut interest rates as early as June. While PCE remains above the central bank’s 2% target, confirming officials’ wait-and-see attitude, the data helped allay fears of a larger rise in inflation.
LPL’s Quincy Crosby said, “For a market focused on when the Fed will start cutting rates, this report is not about ‘if’ but ‘when’ the Fed will start cutting rates in 2024. “It will help me regain the confidence to start.” Finance.
The S&P 500 hit a record high for the 14th time this year, marking its fourth straight winning month. The Nasdaq 100 rose nearly 1%, with Nvidia leading the mega-cap rally. At one point, Apple fell below key technical support at $180. Advanced Micro Devices’ corporate value has exceeded $300 billion. At the end of the day, Dell Technologies announced higher-than-expected profits. The yield on 10-year government bonds remained almost unchanged at 4.26%. Bitcoin has surpassed $61,000.
Evercore’s Krishna Guha said the PCE report contained “no new bad news” on inflation trends, with June a solid prospect for the first rate cut. Jamie Cox of Harris Financial Group said concerns about a reacceleration in prices were “overblown”. And Chris Larkin of Morgan Stanley’s ETrade said the data may allay some of the immediate doubts among traders who had begun to wonder whether the Fed would “backtrack and hold interest rates for longer.” It is pointed out that it cannot be done.
U.S. Treasury yields have fallen from near their highest levels this year. The move was further supported by jobless claims, a sign of a softening labor market, and expectations for month-on-month bond purchases.
Also, positioning indicators before Thursday’s data suggested that traders had exhausted their ability to bet on higher yields in the absence of new information.
Wall Street also continued to monitor Fedspeak.
San Francisco Fed President Mary Daly said central bank officials were prepared to lower interest rates if necessary, but stressed there was no urgent need to cut rates given the strength of the economy. Rafael Bostic of Atlanta reiterated his view that based on his own inflation outlook, it is probably appropriate to begin easing policy this summer.
According to Peter Williams of 22V Research, since January’s consumer price index heat wave, “government officials have largely acknowledged the heat as unwelcome news, especially given the potential for distortions.” “We have struck a balance between placing too much emphasis on any one data point.”
Chris Zaccarelli of the Independent Advisor Alliance said: “The next month will tell us whether the rise in inflation we saw earlier this month is just a blip or is actually the start of a new inflation trend.” We will have to wait until the CPI statistics.” “At least for today, all systems should be shut down and buyers should reappear.”
For Marketfield Asset Management’s Michael Shaul, it was a relief that there were no new upside surprises in inflation, but noted that the “more robust” part of Thursday’s data was “pretty strong.” That’s important.
Policymakers are paying close attention to service inflation, excluding housing and energy, which tends to be more “sticky.” This indicator increased by 0.6% month-on-month, the highest since March 2022. Portfolio management costs, which increased the most in the past three years, and mitigation led the rise.
Corporate highlights
• Best Buy struck a more optimistic tone about reversing a two-year slump on the back of weak demand for electronics and appliances.
• Salesforce Inc. gave a lackluster annual revenue outlook, but investors were pleased with the company’s continued profitability, first-ever dividend, and increased share buybacks.
• C3.ai Inc. reported sales numbers that suggest customers are responding favorably to the software company’s new artificial intelligence-based app.
• Software maker Snowflake Inc. released disappointing revenue forecasts and announced that Chief Executive Officer Frank Slootman would step down from his position.
• HP Inc. reported lower-than-expected quarterly sales due to continued sluggish sales of personal computers.
• The U.S. Department of Justice is reviewing last month’s mid-air explosion of a Boeing door plug on an Alaska Airlines flight, and the company may face criminal charges, according to people familiar with the matter.
• Bayer AG is set to add activist investor Jeffrey Ubben to its supervisory board in the troubled chemicals and pharmaceutical company’s latest restructuring ahead of a highly anticipated capital market event next week. .
• Grifols SA shares fell after management said the Spanish plasma maker will have less cash this year than investors expected, dealing a bigger blow to the stock than last month’s attack by short sellers. It was the biggest decline ever.
This week’s main events:
• China Official PMI, Caixin Manufacturing PMI, Friday
• Friday’s Eurozone S&P World Manufacturing PMI, CPI, Unemployment Rate
• BOE Chief Economist Hugh Pill speaks on Friday
• U.S. Construction Spending, ISM Manufacturing, University of Michigan Consumer Sentiment, Friday.
• Fed’s Rafael Bostic and Mary Daly speak on Friday.
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The main movements in the market are:
stock
– S&P 500 up 0.5% as of 4 p.m. New York time
– Nasdaq 100 rose 0.9%
– Dow Jones Industrial Average rose 0.1%
– MSCI World Index rose 0.3%
currency
– Bloomberg Dollar Spot Index little changed
– The euro fell 0.3% to $1.0808.
– The British pound fell 0.3% to $1.2624.
– The Japanese yen rose 0.5% to 149.91 yen per dollar.
cryptocurrency
– Bitcoin rises 2.3% to $61,956.87
– Ether rose 2.1% to $3,391.7
bond
– 10-year government bond yield little changed at 4.26%
– Germany’s 10-year bond yield fell by 5 basis points to 2.41%.
– UK 10-year bond yields fell 6 basis points to 4.12%.
merchandise
– West Texas Intermediate crude oil fell 0.5% to $78.17 per barrel.
– Spot gold rose 0.5% to $2,043.85 an ounce.
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This article was produced in partnership with Bloomberg Automation.
