- US producer prices fall in July, underlying inflation slowing
- Disney Leads Netflix in Streaming Subscribers, Stocks Rise
- Weekly US jobless claims rise for second straight week
NEW YORK, Aug 11 (Reuters) – The Nasdaq and S&P 500 retreated to close lower on Thursday after recognizing that the Federal Reserve is still aggressively raising interest rates despite fresh evidence that inflation is cooling needs to fully tame rising consumer prices.
The S&P 500 (.SPX) ended slightly lower after hitting fresh three-month highs after data showed the US Producer Price Index (PPI) fell unexpectedly in July.
The fall in the PPI prompted bets in futures markets that the Fed would hike rates by 50 basis points in September, rather than 75 basis points as expected earlier in the week. Continue reading
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The S&P 500 and Nasdaq rose more than 2% on Wednesday after weaker-than-expected consumer prices. But policymakers have left little doubt that they will tighten monetary policy until inflationary pressures fully subside. Continue reading
While the job market showed signs of weakness as the number of Americans filing new jobless claims for the second straight week rose, the Nasdaq fell as investors questioned the strength of the economy. Continue reading
“CPI was better than expected yesterday and a better than analyst forecast PPI this morning. So it fits with this theme that peak inflation has occurred while energy continues to decline,” said George Catrambone, head of Americas trading at DWS Group. “But I would have concerns about a head forgery.”
The Dow Jones Industrial Average (.DJI) rose 27.16 points, or 0.08%, to 33,336.67, while the S&P 500 (.SPX) fell 2.97 points, or 0.07%, to 4,207.27 and the Nasdaq Composite (.IXIC) fell 74.89 points. or 0.58% to 12,779.91.
Volume on US exchanges was 12.36 billion shares, compared to the average of 11.06 billion for the entire session over the past 20 trading days.
Six of the 11 major S&P 500 sectors fell, with healthcare (.SPXHC) leading the way. Energy (.SPNY) rose 3.2% to lead gainers and helped value stocks (.IVX) climb 0.4% while growth stocks (.IGX) fell 0.5%.
Banks (.SPXBK) extended their rally, with Goldman Sachs (GS.N) and JPMorgan Chase & Co (JPM.N) up 1.1% and 1.5%, respectively.
A trader works on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. August 8, 2022. REUTERS/Andrew Kelly
Benchmark US Treasury yields hit more than a two-week high as bond investors bet the Fed will continue raising rates as inflation is still hot, although price pressures have eased somewhat.
Demand, reflected in a nearly 9% increase in aggregate purchasing power, is still too strong and could keep the Fed on the fence for longer than many are hoping, said Jack Janasiewicz, senior portfolio strategist at Natixis Investment Managers Solutions.
“We’re getting a little more concerned because the Fed may have to do a little more work to try to cool down this excess demand side of the equation,” Janasiewicz said.
High-growth stocks that rallied on Wednesday fell, Tesla Inc (TSLA.O) down 2.6% and Amazon.com Inc (AMZN.O) down 1.5%.
Despite its recent surge from mid-June lows, the tech-heavy Nasdaq is down about 18% so far this year as fears of aggressive monetary policy have smothered appetite for stocks, particularly high-growth stocks.
The US Federal Reserve has hiked interest rates by 225 basis points since March as it struggles to cool demand without triggering a sharp surge in layoffs.
On the for-profit news side, Walt Disney (DIS.N) surged 4.7% as the media giant trailed rival Netflix Inc (NFLX.O) with 221 million streaming customers and announced it would be raising prices for customers who want to watch Disney+ or Hulu without ads. Continue reading
Bumble Inc (BMBL.O) fell 8.6% after lowering its full-year revenue guidance after being hit by the Ukraine war, while also grappling with rival Match Group Inc (MTCH.O) on the online dating market. Continue reading
Rising issues predominated on the NYSE at a 1.54 to 1 ratio; on the Nasdaq, a 1.25 to 1 ratio favored movers.
The S&P 500 posted four new 52-week highs and 29 new lows; the Nasdaq Composite posted 69 new highs and 22 new lows.
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Reporting by Herbert Lash, additional reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Edited by Arun Koyyur and Lisa Shumaker
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