U.S. stocks were little changed Tuesday morning as Wall Street continued a sluggish start to the week, as investors assimilate the new October trade balance readings and await the results of the Georgia Senate runoff election.
The S&P 500 (^GSPC), Dow Jones Industrial Average (^DJI) and technology-heavy Nasdaq Composite (^IXIC) were flat as market trading began.
Wall Street sought to recover from a rout on Monday as stocks tumbled as investors digested early releases in a week full of economic data. The S&P is set for its sixth day of decline in the past seven trading sessions, according to Bespoke Investment Group. Data readings indicating continued resilience in different pockets of the economy have prompted the market to fixate on the risk that the Federal Reserve will continue to raise interest rates throughout next year.
Fed officials, including Chairman Jerome Powell, have widely suggested the central bank will downgrade to half a point at their meeting next week after four straight 75 basis point increases. But Friday’s jobs report showed solid job gains and robust wage growth, the opposite of what the Federal Reserve would like to see in its fight against inflation.
A smaller increase would signal a new phase for the central bank’s tightening campaign, but high wage pressures could lead more civil servants to raise their benchmark federal funds above 5% next year, which is currently the case. predicted by Wall Street.
“In light of the various releases, expectations for the Fed’s terminal rate set for May 2023 rose 9.5 basis points on the day to 5.01%, again crossing the 5% threshold,” wrote Jim Reid and his colleagues at Deutsche Bank in a start. morning note Tuesday.
“That’s a notable change from just before Friday’s jobs report, when it hit a low of 4.83%, and means most declines after the speech of the President Powell on Wednesday have now reversed,” he added.
Officials will get another inflation reading on Dec. 13, the first day of the Fed’s two-day policy meeting, when the Labor Department releases the consumer price index for November.
According to Mike Gormley, Equity Institutional Sales at JPMorgan, December got off to a tougher start in the markets as investors “unwind consensus macro positions this year, which have followed since the cool CPI release in mid-November.” .
In commodity markets, oil prices continued to fall on Tuesday, with crude futures trading at $75.83 a barrel. Oil’s recent plunge came even amid recent moves by OPEC and its Russian-led allies to stay the course on production cuts and as Chinese officials tentatively eased COVID restrictions that have eroded the consumption of the world’s largest importer.
In bond markets, the yield on the 10-year US Treasury note rose slightly to 3.57% on Tuesday. The dollar also fell slightly.
In corporate news, PepsiCo (PEP) plans to cut hundreds of jobs at the headquarters of its North American snacks and beverages divisions, The Wall Street Journal reported. The move follows other companies, including Walmart and Ford, cutting white-collar jobs amid economic uncertainty.
Separately, shares of GitLab (GTLB) rose nearly 12% after the company reported third-quarter earnings that beat Wall Street expectations and boosted expected revenue in 2023.
And on the political front, Georgia voters vote Tuesday in another runoff race that will determine whether Democratic Sen. Raphael Warnock can impose a stiff arm on Republican challenger Herschel Walker. Although the Democrats have already taken control of the Senate, both parties have invested heavy resources in the race.
“Senate seats are only elected every 6 years with only a third of the chamber elected each time, a victory for either side would also make it easier for them to take control of the 2024 and 2026 elections, as this seat of Georgia would not be in the election again until 2028,” Reid and his Deutsche Bank colleagues wrote in a note.
Meanwhile, President Joe Biden will visit TSMC’s factory in Arizona on Tuesday as the Taiwanese chipmaker said it would triple its planned investment there to $40 billion. Joining Biden during his visit will be Apple CEO Tim Cook, TSMC founder Morris Chang, chipmaker Micron Technology Inc. chief Sanjay Mehrotra and NVIDIA founder and CEO Jensen Huang. said the White House.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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