Stocks Fall on US Economic Data and Europe Angst: Markets Wrap – Yahoo Finance

June 14, 2024

(Bloomberg) — Stocks ended the week weaker after disappointing U.S. economic data and worries about a deepening political crisis in France led traders to shy away from riskier assets.

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U.S. stocks pared this week’s gains as high prices continued to hurt personal finances and a measure of consumer confidence unexpectedly fell to a seven-month low. Markets continue to price in around two rate cuts this year, but Cleveland Federal Reserve Bank President Loretta Mester said she wants to see several more months of positive inflation data before considering any easing measures.

“While we on Wall Street obsess over changes in the inflation rate, many consumers couldn’t care less and are still suffering from the cumulative effects on wage growth,” said Peter Boockvar of the Book Report. “In the end, it’s only the inflation squeeze that low- and middle-income consumers are feeling.”

ECB officials see no need to worry about French market turmoil

Traders flocked to the market’s safest spots on Friday, with French shares losing $200 billion in market capitalization this week, roughly the size of Greece’s economy, after President Emmanuel Macron decided to call early elections.The government’s bonds are at the heart of the sell-off, and the premium investors demand to hold 10-year notes over safer German government bonds is headed for its biggest weekly surge on record.

“The situation in Europe is starting to look a bit uncertain,” said Matt Murray of Miller, Tabak & Co. “While it will be some time before this develops into a new sovereign debt crisis, the developments in Europe (and France in particular) are causing concern in markets due to soaring sovereign debt levels and worries about ballooning budgets.”

The S&P 500 fell to around 5,420. The Stoxx Europe 600 index fell 1.1%. France’s CAC 40 index fell more than 6% for the week, its biggest drop since March 2022. The weakness puts France at risk of losing its status as Europe’s largest stock market.

The 10-year Treasury yield fell 3 basis points to 4.21%. The dollar is heading for its highest level since November. The euro has been the worst-performing major currency against the dollar this week.

European Central Bank officials don’t see any need to be alarmed by the market turmoil that has hit France in recent days, according to people familiar with the matter. An ECB spokesman declined to comment.

Unrest among traders grew after France’s left-wing coalition parties published a manifesto criticising most of President Emmanuel Macron’s seven years of economic reforms and putting France at odds with the European Union over fiscal policy.

“We are sympathetic to a flight to quality given the French economy’s relevance to the EU and its return to Brexit, and also to the fact that if France follows the UK out of the EU, so to speak, then the EU’s longer-term prospects will need to be seriously considered,” said Ian Lingen and Beil Hartman of BMO Capital Markets.

According to Macquarie Group’s Thierry Wisman, France is heading towards one of two extreme political scenarios.

“Neither parliament is committed to market principles, fiscal responsibility and probably a single currency.”

Trading of dollar-denominated bonds worth more than $1 million at big French banks has surged in recent days and is far more frequent than larger transactions at euro zone banks, according to Trace data compiled by Bloomberg. That’s hitting the debt of big financial institutions such as BNP Paribas and Credit Agricole.

Company Highlights:

The Federal Aviation Administration is investigating how titanium, with possibly falsified records, came from an unnamed Chinese manufacturer onto commercial jets made by Airbus SE and Boeing Co.
Tesla investors reapproved Elon Musk’s compensation, approved the company’s headquarters relocation to Texas and gave the CEO a vote of confidence.
Adobe predicted strong future sales for its creative products, suggesting that customers are adopting the company’s new artificial intelligence-based tools.
Furniture retailer RH reported a wider-than-expected first-quarter loss.
California’s largest utility expects electricity demand to double by 2040 due to artificial intelligence, electric vehicles and other efforts to further electrify the economy, according to PG&E Corp.’s chief executive officer.

Some of the key market developments:

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