Tech-Led Stock Rally Put on Pause After Mixed Data: Markets Wrap

(Bloomberg) — A rally that shot the world’s biggest technology stocks to a series of all-time highs lost steam Thursday while Treasuries resumed a decline as traders digested a slew of data ahead of next week’s Federal Reserve policy-setting meeting.

The S&P 500 slid 0.1% while the Nasdaq 100 slipped 0.4% after higher-than-expected jobless claims and too hot producer price data. Both equity benchmarks had made strong gains in the prior session after an in-line US inflation report almost fully baked in a quarter-point interest rate cut at the Fed’s Dec. 18 meeting.

Shorter dated Treasury yields rose after hitting the day’s lows on data showing 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. The yield on the benchmark 10-year rose to 4.29%.

“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. 

“We could get a bit of a hawkish cut this month from the Fed where they say ‘we’ll cut now but we’ll watch data’,” said Ella Hoxha, head of fixed income at Newton Investment Management. “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, setting the stage for a similar move by the Federal Reserve next week. The Swiss National Bank made a surprising 50 basis-point rate reduction.  

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

In commodities, WTI crude contracts slumped after the International Energy Agency warned of a supply glut in 2025, snapping a three-day gain fueled by the possibility of tighter curbs on Russian and Iranian flows. 

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 Discovery Inc. is changing its corporate structure and creating separate divisions for its cable and streaming businesses.

Key events this week:

• Eurozone industrial production, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.1% as of 10:33 a.m. New York time
• The Nasdaq 100 fell 0.4%
• The Dow Jones Industrial Average was little changed
• The Stoxx Europe 600 fell 0.1%
• The MSCI World Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.1% to $1.0482
• The British pound fell 0.5% to $1.2687
• The Japanese yen rose 0.1% to 152.26 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $101,330.22
• Ether rose 3.5% to $3,967

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.29%
• Germany’s 10-year yield advanced five basis points to 2.17%
• Britain’s 10-year yield advanced two basis points to 4.34%

Commodities

• West Texas Intermediate crude fell 1.3% to $69.36 a barrel
• Spot gold fell 1.3% to $2,682.12 an ounce

This story was produced with the assistance of Bloomberg Automation.

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

©2024 Bloomberg L.P.