Financial experts on Wall Street are scrutinizing the Federal Reserve's strategies regarding interest rates.
Financial experts on Wall Street are scrutinizing the Federal Reserve's strategies regarding interest rates.
As technology stocks retreated and in preparation for the US labor market data due on Friday, US exchanges ended the day in the red. The US Federal Reserve is delivering conflicting messages about a possible additional interest rate reduction in December.
Investors on Wall Street adopted a cautious approach ahead of the upcoming US November jobs report, set to impact the US Fed's policymakers alongside next week's US inflation data. The weekly jobs report, revealed lower than anticipated numbers, following a somewhat underwhelming increase in US private sector employment the previous day.
The Dow Jones Index, which had surpassed 45,000 points on the preceding day, witnessed a drop of 0.6% to 44,766 points, with the heavily weighted UnitedHealth stock (-5.2%) being a significant drag. The S&P-500 and Nasdaq indices showed only marginal gains. As per initial figures, there were 1,278 winners (previously 1,399) and 1,517 losers (previously 1,388) on the NYSE. 58 stocks (previously 67) remained unchanged. Yields in the bond market demonstrated a mixed picture, having declined more distinctly the previous day. The euro strengthened to 1.0584 dollars, largely due to the market's newfound tranquility over the French government crisis.
U.S. Federal Reserve Chairman Jerome Powell reiterated his standard stance in late afternoon trading on Wednesday, stating that the Fed could afford to hold back with rate cuts due to the robust economy and uncertain inflation outlook. On the contrary, the president of the Federal Reserve of St. Louis, Alberto Musalem, warned of the potential risk of making too hasty and aggressive rate cuts. The market then viewed a 70% (previously 78%) chance that the Fed would implement a further 25 basis point rate reduction.
Bitcoin surges past $100,000, influencing Coinbase & peers
The first leap above the $100,000 milestone for Bitcoin, including an all-time high of around $104,050, brought stock prices of companies linked to crypto trading into the spotlight. Initially, they increased, but subsequently turned negative. Microstrategy, Coinbase Global, and Robinhood Markets fell by up to 4.8%. However, these stocks have all seen significant gains this year, between 90 and over 500%. Bitcoin once again slipped below $100,000.
Since Donald Trump's election victory as US President, promising reduced regulation and positioning the US as a Bitcoin powerhouse, Bitcoin and other cryptocurrencies have witnessed substantial growth. The recent surge was initiated by the nomination of Paul Atkins as head of the US Securities and Exchange Commission (SEC), perceived as "crypto-friendly".
Boeing (-1.0%) was somewhat affected after a federal judge rejected the agreement between Boeing and the Justice Department related to the two deadly 737 MAX crashes. Synopsys slumped by 12.4% after the software maker's first-quarter results missed market expectations. SentinelOne plummeted 13.2%. The cybersecurity company reported a loss in the reporting quarter, which was even higher than in the same period last year. While the result was still on track, adjusted for, it still fell short of the consensus estimate.
PVH, the parent company of brands such as Tommy Hilfiger and Calvin Klein, lowered its revenue projections. Its stock fell by 3.5%. Five Below, however, soared over 10%. The discount retailer boosted its fiscal year forecast following a successful "Black Friday." A new CEO was appointed following a six-month search. American Eagle Outfitters, meanwhile, cut its sales estimate, causing its stock to slide by 14.3%.
Oil prices remain unchanged
Despite OPEC and its allies opting to postpone the scheduled oil production boost for January by three months due to low prices and supply concerns, oil prices exhibited little change. Traders argued that this was largely expected, and deviations within the alliance are common despite such agreements. The step extended some breathing room, but given the weak global oil demand, the cartel might find itself in a similar predicament.
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The robust economy, as mentioned by U.S. Federal Reserve Chairman Jerome Powell, could influence the future actions of the Fed with regard to interest rate reductions. The strength of the economy might also impact the performance of various sectors, including stocks and the bond market.
Given the current state of the economy, investors might be closely watching key data releases, such as the US labor market data, to gauge the direction of economic indicators and make informed investment decisions.