Silke Mayr Indexes Decline Following Mixed Economic Signals
Wall Street’s main indexes fell Thursday after a volatile session driven by October’s producer price data. The report met forecasts, but investors remain cautious ahead of Federal Reserve Chairman Jerome Powell’s upcoming remarks on interest rate policy.
The Producer Price Index (PPI) for final demand increased 0.2% in October, matching expectations. However, the year-over-year PPI rose 2.4%, slightly above forecasts, raising concerns about lingering inflation. On a brighter note, U.S. jobless claims for the week ending November 9 fell by 4,000 to 217,000, beating estimates.
Keith Buchanan, senior portfolio manager at Globalt Investments, noted that inflation and employment trends signal a potential “soft landing” for the economy. However, he cautioned that rising Treasury yields might create economic headwinds. The U.S. 10-year Treasury yield reached its highest level since July, indicating shifting inflation expectations. In response, traders adjusted their rate cut forecasts, with a 79.1% chance of a 25-basis-point cut in December, down from 82% previously.
The Dow Jones Industrial Average dropped 36.90 points, or 0.08%, to 43,921.29. The S&P 500 declined 9.36 points, or 0.16%, to 5,976.02, while the Nasdaq Composite lost 34.83 points, or 0.18%, to close at 19,195.90. Walt Disney’s 10.4% surge supported the Dow, following stronger-than-expected earnings from the entertainment giant.
Growth Stocks Face Pressure as Treasury Yields Climb
Growth stocks, often sensitive to interest rate changes, faced pressure. Tesla and Alphabet both dropped over 1%, while the real estate sector was the S&P 500’s worst performer. Investors are awaiting clarity from Powell’s upcoming speech in Dallas, where he is expected to offer more details on the Federal Reserve’s policy outlook. Recent remarks from some Fed officials have highlighted ongoing inflation risks, despite the potential for future rate cuts.
Fed Governor Adriana Kugler acknowledged progress in reducing inflation but stressed the need for continued effort to achieve full control. Traders remain focused on any signals from Powell’s speech and other Fed officials, including New York Fed President John Williams, for insight into future monetary policy.
In corporate news, Tapestry, parent company of Coach, saw its stock rise 8.8% after terminating its $8.5 billion acquisition of Capri Holdings. A U.S. judge’s ruling blocked the deal, causing Capri’s shares to fall 4.2%.
Bitcoin-related stocks rose as Bitcoin’s price climbed. Marathon Digital (MARA) gained 2.6%, while MicroStrategy (MSTR) advanced 4.6%, buoyed by optimism about favorable policy changes under the incoming Trump administration.
On the broader market, advancing stocks outnumbered decliners, with a 1.29-to-1 ratio on the NYSE and a 1.12-to-1 ratio on the Nasdaq. The S&P 500 recorded 16 new 52-week highs and 6 new lows, while the Nasdaq posted 37 new highs and 61 new lows. Investors now await further comments from Fed officials, which could shape market sentiment on future monetary policy.