Red rates on Wall Street

(ABM FN-Dow Jones) The US stock markets were in the red on Monday evening, in response to the latest inflation figures and purchasing data and especially the actions of Federal Reserve Chairman Jerome Powell, who is clearly in no hurry to cut interest rates.

“Strong economic data could make it difficult for the Federal Reserve to cut rates three times this year,” said Brent Schutte of Northwestern Mutual Wealth Management. And if the Fed indeed waits longer to lower interest rates, the chance of a mild, short recession increases, according to Schutte.

The S&P 500 index fell 0.4 percent and the Nasdaq suffered a loss of 0.2 percent.

Investors today had a chance to react to last Friday’s inflation figures, when Wall Street was closed.

The so-called PCE index for core inflation, an important indicator of the Federal Reserve’s monetary policy, was 2.8 percent on an annual basis in February, compared to 2.9 percent in January. An inflation rate of 2.8 percent was initially reported for January, but this figure was revised slightly upwards. Economists had expected core inflation of 2.8 percent for February.

The general price index came to 2.5 percent. In January this was 2.4 percent. Economists also expected an increase of up to 2.5 percent.

Americans’ incomes rose 0.3 percent in February, following a 1.0 percent increase in January. Spending rose by 0.8 percent, after a plus of 0.2 percent in January.

On Friday, shortly before the inflation figures, the euro/dollar was trading at 1.0786. On Monday it was 1.0740.

Fed Chairman Powell said in San Francisco on Friday that the inflation figures were not surprising. He reiterated that the Fed is sticking to its data-driven approach and that given the US economic resilience, there is no need for the central bank to rush into a cycle of rate cuts. According to Powell, the Fed can wait for more evidence that inflation is falling to the desired target.

Purchasing managers’ indices were released on Monday and confirmed the good condition of the American economy.

S&P Global’s purchasing managers index showed a slight slowdown in growth, with an index decline from 52.2 to 51.9. However, this was the third month in a row that the American industry grew.

“Another encouraging improvement in business conditions,” S&P economist Chris Williamson said in a note Monday, another signal that the U.S. economy grew at a solid pace in the first quarter.

The ISM purchasing managers index, which is often attributed more value, was even a very clear windfall.

This purchasing managers index rose from 47.8 in February to 50.3 in March, indicating growth again. The market expected an index increase to 48.1.

The US ten-year yield rose today by 13 basis points to 4.327 percent.

Oil became up to one percent more expensive after the Iranian consulate in Damascus was reportedly hit by an Israeli missile attack.

Furthermore, the Micron Technology share stood out. After a buy recommendation from Bank of America, the share rose more than 5 percent. The analysts are confident in the demand for high-bandwidth memory, or HBM.

A notable faller was stock market newcomer Trump Media & Technology Group. On Monday, the share had to lose 24 percent after former President Donald Trump’s media company reported that it would suffer a loss of $58 million in 2023 on a turnover of $4.1 million.

Source: ABM Financial News