Tech Weighs on Stocks; Treasuries Extend Rally: Markets Wrap

(Bloomberg) — Treasuries continued to rally — while US stocks fluctuated — as latest inflation data did little to alter expectations on the Federal Reserve’s path. 

The S&P 500 struggled for direction. The Nasdaq 100 was dragged down by shares of Nvidia Corp. Yields remained lower across the curve, with the 10-year rate now around 3.74%. The dollar is heading for a fourth week of losses. 

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The Fed’s preferred gauge of underlying US inflation rose mildly in August, as did inflation-adjusted consumer spending. Those figures highlighted a cooling economy, reinforcing bets that the US central bank will continue to cut rates. 

Traders also got a read on US consumer sentiment on Friday, with the indicator reaching a five-month high in the wake of the Fed lowering borrowing costs. 

After the data, the market is still pricing in a split chance between a quarter point and half point cut at the Fed’s next meeting. Economists now see inflation reaching the US central bank’s 2% target next year. 

“Add today’s PCE price index to the list of economic data landing in a sweet spot,” said Chris Larkin, managing director, trading and investing, at E*Trade. “Inflation continues to keep its head down, and while economic growth may be slowing, there’s no indication it’s falling off a cliff.”

Damian McIntyre, a portfolio manager at Federated Hermes, said that while a soft landing for the economy is never guaranteed, investors should find solace in the strength of recent economic data.

“Today’s inflation print confirms what Jerome Powell told us last week: inflation is falling, the consumer is strong, and the labor market remains resilient,” he said.

China’s daily stimulus announcements have also stoked risk appetite across markets this week. Geopolitical tensions continue to simmer as Israel said, on Friday, that it has hit Hezbollah’s main headquarters in Southern Beirut.

Japan’s yen rebounded as Shigeru Ishiba won the vote for leadership of the nation’s ruling party. Ishiba, a party veteran who has served in several senior roles including defense minister, is seen as supportive of the Bank of Japan’s plan to gradually hike rates.

In China, the CSI 300 Index concluded its best week since 2008. The People’s Bank of China unleashed one of the country’s most daring policy campaigns in decades, with Beijing rolling out a strong stimulus package in a push to shore up the slowing economy and investor confidence. 

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 12:41 p.m. New York time
• The Nasdaq 100 fell 0.4%
• The Dow Jones Industrial Average rose 0.6%
• The MSCI World Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.3% to $1.1147
• The British pound fell 0.3% to $1.3381
• The Japanese yen rose 1.6% to 142.48 per dollar

Cryptocurrencies

• Bitcoin rose 2.4% to $66,256.88
• Ether rose 3.3% to $2,719.57

Bonds

• The yield on 10-year Treasuries declined five basis points to 3.74%
• Germany’s 10-year yield declined five basis points to 2.13%
• Britain’s 10-year yield declined three basis points to 3.98%

Commodities

• West Texas Intermediate crude rose 0.6% to $68.09 a barrel
• Spot gold fell 0.7% to $2,653.48 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu, Divya Patil, Alex Nicholson, Sujata Rao, Margaryta Kirakosian and Edward Bolingbroke.

©2024 Bloomberg L.P.