Wall Street Bets on Hold as Tech-Led Rally Stalls: Markets Wrap

(Bloomberg) — A rally that shot the world’s biggest technology stocks to all-time highs lost steam Thursday as traders parsed through data to determine how soon the Federal Reserve will hit pause on interest-rate cuts. US government bonds fell.

The Nasdaq 100 slipped 0.4% while the S&P 500 edged down 0.3% whileafter higher-than-expected jobless claims and too hot producer price data. The equity benchmarks had made strong gains in the prior session after an in-line US inflation report almost fully baked in bets on a quarter-point interest rate cut at the Fed’s Dec. 18 meeting.

With only a handful of stocks — including Nvidia Corp. and Apple Inc. — responsible for the bulk of the the S&P 500’s 27% year-to-date run some on Wall Street are growing increasingly concerned.

“Investors have started to hesitate,” according to strategists at SentimentTrader. The stocks gauge is now headed for its ninth consecutive day where the number of constituents falling outnumbers those rising. That’s the longest such streak since Bloomberg started collecting the data in 2004.

Meanwhile, Treasuries failed to hold onto an advance after data showed initial jobless claims rose to 242,000 for the week ended Dec. 7, ahead of economists’ estimates for 220,000. November producer price data released at the same time was mixed, with some measures exceeding estimates.

“With high egg prices appearing to play a key role in the hotter-than-expected headline PPI, traders may be focusing more on the jump in jobless claims,” according to Chris Larkin at E*Trade from Morgan Stanley. While there’s been a steady stream of solid labor data, “the Fed is primed to be sensitive to any signs of a softening jobs picture.”

With a third-consecutive cut from the US central bank widely expected, traders’ focus is turning to the Fed’s projections for next year. Still-elevated inflation pressures and the prospect of a pause in early-2025 have left investors on edge. 

US bonds fell for the fourth day in a row, Treasuries have climbed after readouts this week only to see those gains evaporate. The yield on the 10-year rose nearly to 4.32%.

Stan Shipley at Evercore ISI expects the benchmark note to end 2025 around 4.6%.

“The uncertainty of the US economic outlook has increased even though the recession odds have vanished,” Shipley wrote. “This is because economic policy details are not clear.”

To Ella Hoxha, head of fixed income at Newton Investment Management, a “hawkish cut” from the Fed is possible next week. “In that setup, the risk is still that you price the Fed to be a bit more cautious rather than more dovish.”

In the EU, the European Central Bank met expectations for a quarter-point of interest-rate easing, while the Swiss National Bank made a surprising 50 basis-point rate reduction.  

The euro wobbled after the ECB cut. Earlier in the week, Canada lowered its policy rates by a half point, while Australia hinted it’s moving toward easing and China vowed to deliver rate cuts. Japan, meanwhile, signaled it’s in no hurry to hike rates. 

In commodities, WTI crude contracts pared losses after the International Energy Agency warned of a supply glut in 2025. Gold tumbled as much as 1.6%, the biggest intraday drop in more than two weeks.

Corporate Highlights: 

• Riot Platforms Inc.’s stock jumped after a report that activist investor Starboard Value had built up a significant stake in the Bitcoin miner.
• Adobe Inc. was under pressure after giving a disappointing annual sales outlook, underscoring anxieties that the creative software company may lose business to emerging artificial intelligence-based startups.
• Warner Bros Discoverny Inc. is changing its corporate structure and creating separate divisions for its cable and streaming businesses.
• ServiceTitan Inc. shares opened 42% above their initial public offering price after the residential and commercial repair software company raised $624.8 million.
• Apple Inc.’s ambitious plan to create in-house components for its devices will include switching to a homegrown chip for Bluetooth and Wi-Fi connections starting next year, a move that will replace some parts currently provided by Broadcom Inc.

Key events this week:

• Eurozone industrial production, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.3% as of 2:01 p.m. New York time
• The Nasdaq 100 fell 0.5%
• The Dow Jones Industrial Average fell 0.4%
• The MSCI World Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.2% to $1.0480
• The British pound fell 0.5% to $1.2683
• The Japanese yen was little changed at 152.48 per dollar

Cryptocurrencies

• Bitcoin fell 0.8% to $100,838.92
• Ether rose 2.3% to $3,921.27

Bonds

• The yield on 10-year Treasuries advanced five basis points to 4.32%
• Germany’s 10-year yield advanced eight basis points to 2.20%
• Britain’s 10-year yield advanced five basis points to 4.36%

Commodities

• West Texas Intermediate crude fell 0.2% to $70.16 a barrel
• Spot gold fell 1.2% to $2,684.35 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Geoffrey Morgan, John Viljoen, Robert Brand, Elizabeth Stanton, Edward Bolingbroke and Sujata Rao.

©2024 Bloomberg L.P.