U.S. stocks faltered on Thursday as optimism around easing inflation and a shift in Federal Reserve policy faded, while Wall Street analyzed a slew of corporate earnings.
The S&P 500 (^GSPC) fell 0.3% after hitting a session low of more than 1%, while the Dow Jones Industrial Average (^DJI) fell about 0.1%, eliminating a loss of more than 300 points. The technology-focused Nasdaq Composite (^IXIC) edged down 0.2%.
Comments from St. Louis Federal Reserve Chairman James Bullard weighed on investor sentiment early Thursday as he suggested the Fed’s monetary tightening campaign had had ‘limited effects’ so far. on observed inflation and that even a “dovish” policy from here should push the fed funds rate up by at least another percentage point.
Investors are expecting a prolific day from Fedspeak, with several Fed policymakers set to make public remarks across the country on Thursday.
In the spotlight of economic data, unemployment insurance filings fell last week, holding near historic lows even as a wave of tech companies announce layoff plans. Initial jobless claims, the most timely snapshot of the labor market, were 222,000 for the week ended Nov. 12, down 4,000 from the previous week, according to Department of Labor data. Work Thursday.
A recent uptrend in stock markets petered out on Wednesday after strong retail sales data for October quashed hopes of a change in central bank policy, recently revived by a series of reports on milder inflation. A shortfall from Target also weighed on sentiment in Wednesday’s session, with the company citing inflation and a deteriorating economic backdrop ahead of the key holiday shopping season.
Other industry peers fared better over the period.
Macy’s (M) shares jumped more than 7% at the open after the department store giant beat estimates and raised its full-year profit forecast, buoyed by strong demand in the areas of luxury of his activity. Kohl’s (KSS), meanwhile, beat earnings expectations but withdrew its full-year outlook due to “significant” macroeconomic headwinds and the unexpected transition of its chief executive. Shares fell nearly 3% to start the session.
Shares of Bath & Body Works (BBWI) soared 26% in early trading after the personal care and home fragrance maker raised its full-year earnings outlook. Retailers Walmart (WMT), Lowe’s (LOW), Home Depot (HD) all beat analysts’ estimates.
Elsewhere, as the earnings season hits its home stretch, Nvidia (NVDA) CEO Jensen Huang said strong demand for the chips will help the company weather potential economic challenges – enough insurance to offset the downsides. losses from its gaming business. Shares slid 1%.
Machinery maker Cisco Systems (CSCO) saw its shares rebound 3% after the company announced a positive earnings outlook and said it was downsizing and reducing office space.
Meanwhile, in Washington, D.C., Republicans won a majority in the House of Representatives on Wednesday, resulting in shared control of the U.S. Congress — a positive sign for investors as stocks have always performed better in tough times. political deadlock.
Still, strategists claimed that inflation and economic conditions remain at the center of market concerns. Seema Shah, head of global strategy for asset management, said the outcome was expected to be “largely unrelated to the overall market outlook”.
“Instead, it is historically high inflation, the Fed’s response to inflation and the resulting risk of recession, coupled with key structural policy decisions, that will determine the direction of the market.”
On that front, San Francisco Federal Reserve Chair Mary Daly said in an interview with CNBC that a rate pause is currently not an option while indicating that the fed funds rate could reach the range. from 4.75% to 5.25%.
But Federal Reserve Governor Christopher Waller said Wednesday that recent economic data made him more comfortable with the possibility of a 50 basis point hike at the central bank’s December meeting.
Goldman Sachs, while forecasting a 0.50% rise next month, added an additional quarter point in May 2023 to its outlook, raising its expectation for the top federal funds rate to 5-5.25%.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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