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Stocks End Month at New Highs After Inflation Data: Markets Wrap – Yahoo Finance

(Bloomberg) – Wall Street traders worried about another disappointing inflation report were buoyed after the Federal Reserve’s preferred price gauge matched expectations. I was relieved to some extent.

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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 ease fears of a much 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. In the late hours, Dell Technologies posted better-than-expected sales. New York Community Bancorp took a $2.4 billion hit to its bottom line after identifying weaknesses in its loan review process and writing down past deals. The lender appointed new leadership to weather the turmoil. The yield on the 10-year US Treasury note fell 1 basis point to 4.25%. 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 E*Trade said the data raises immediate doubts among traders who had begun to wonder if the Fed would “go on the back burner and hold interest rates for longer.” It is pointed out that this may be alleviated to some extent.

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 prior to 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 officials were prepared to cut rates if necessary, but stressed there was no urgent need to do so given the strength of the economy. Atlanta’s Rafael Bostic reiterated that based on his own inflation outlook, it is probably appropriate to start easing policy this summer. Cleveland Fed Director Loretta Mester said Thursday’s inflation data show policymakers need to do more.

According to Peter Williams of 22V Research, since January’s consumer price index heat wave, “government officials have largely recognized the heat as unwelcome news, but have also been slow to move forward, especially given the potential for distortions.” “We have struck a balance between not 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 inflation in services other than housing and energy, which tend to be “stickier.” This indicator increased by 0.6% month-on-month, the highest value since March 2022. Portfolio management costs, which increased the most in the past three years, and mitigation led the rise.

Company highlights:

  • Hewlett Packard Enterprise Co. has cut its sales and profit outlook for the current fiscal year, citing weak demand for networking products and a shortage in the supply of computer chips.

  • B. Riley Financial Co. suffered widening quarterly losses, cut its dividend in half and delayed filing its annual report while the company investigated a deal with a major client that led to an attack by short sellers.

  • Mattel announced that it would be unable to file its annual report due to deficiencies found in its internal financial controls.

  • Fisker plans to cut 15% of its workforce, saying there are “serious questions” about whether the electric car maker can continue operating unless it secures new funding.

  • Investment giant Vanguard Group has announced that CEO Tim Buckley will retire by the end of the year after more than 30 years with the company.

  • Eastman Kodak is considering a move to release profits from its overfunded pension plan, people familiar with the matter said.

  • Snowflake Inc. suffered its worst share price drop in history after the software maker released disappointing revenue forecasts and announced that CEO Frank Slotman would step down.

  • Best Buy Co. struck a more upbeat tone about reversing a two-year slump on the back of weak demand for electronics and appliances.

This week’s main events:

  • China official PMI, Caixin manufacturing PMI, Friday

  • Eurozone S&P World Manufacturing PMI, CPI, Unemployment Rate, Friday

  • BOE Chief Economist Hugh Pill speaks on Friday

  • US Construction Spending, ISM Manufacturing, University of Michigan Consumer Sentiment, Friday

  • Fed’s Rafael Bostic and Mary Daly speak on Friday

The main movements in the market are:

stock

  • As of 4 p.m. New York time, the S&P 500 was up 0.5%.

  • Nasdaq 100 rose 0.9%

  • The 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 to the dollar.

cryptocurrency

  • Bitcoin rose 2.3% to $61,956.87.

  • Ether rose 2.1% to $3,391.7

bond

  • The 10-year Treasury yield fell 1 basis point to 4.25%.

  • Germany’s 10-year bond yield fell 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 a barrel.

  • Spot gold rose 0.5% to $2,043.85 an ounce.

This article was produced in partnership with Bloomberg Automation.

–With assistance from Julien Ponthus, Michael McKenzie and Jessica Manton.

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