Wall Street Halts Rally As Fed-Cut Euphoria Fades: Markets Wrap
Before the inflation data, the next test for the stock market will be a read on what’s been driving gains for the past few years: artificial-intelligence euphoria.
The Fed’s preferred measure of underlying inflation probably ticked higher last month, underscoring the challenge policymakers face in balancing rising prices and mounting risks in a fragile job market.
The personal consumption expenditures price index excluding food and energy rose 2.9% in July from a year ago. That would be fastest annual pace in five months.
“Jerome Powell’s ‘all clear’ signal for rate cuts turned a down week for stocks into a gain, but now the discussion will likely turn to how aggressive the Fed may be,” said Chris Larkin at E*Trade from Morgan Stanley. “Signs of a slowing labor market currently appear to be outweighing inflation concerns, but the Fed hasn’t abandoned its 2% target.”
The S&P 500 fell 0.2%. The yield on 10-year Treasuries advanced three basis points to 4.28%. The Bloomberg Dollar Spot Index was little changed.
Before the inflation data, the next test for the stock market will be a read on what’s been driving gains for the past few years: artificial-intelligence euphoria.
Nvidia Corp. is set to report quarterly earnings on Wednesday after the market close, and traders are hoping it can soothe fears about AI spending and effectively confirm that the stock market’s latest rally isn’t just a technology bubble.
“Unless we get some sort of major UFO (UnForeseen Occurance), the most important development of this week will be the earnings report and guidance out of Nvidia,” said Matt Maley at Miller Tabak.
The odds that the giant chipmaker will report disappointing numbers - or give poor guidance - are extremely low, Maley said.
“However, we remember when they reported fabulous earnings and guidance in August of 2023…only to have the stock see a ‘sell the news’ reaction within a few days,” he noted.
Corporate Highlights:
Wayfair Inc. and RH sank as President Donald Trump said late Friday the US is conducting a “major Tariff Investigation on Furniture coming into the United States,” setting the stage for industry-specific levies.
Keurig Dr Pepper Inc. agreed to buy JDE Peet’s NV for €15.7 billion ($18.4 billion) to bolster its struggling coffee business before kicking off a split of its operations.
Texas-based Crescent Energy Co. agreed to buy rival shale oil producer Vital Energy Inc. for about $733 million.
Galaxy Digital, Multicoin Capital and Jump Crypto are in talks with potential backers about raising roughly $1 billion to accumulate Solana, in what would be the largest treasury dedicated to the digital token.
Webull Corp. will let US customers buy and sell cryptocurrencies on its trading platform again after dropping the service in 2023 when it was trying to go public.
Orsted A/S sank after the Trump administration blocked construction of an almost-finished offshore wind farm, throwing a wrench into a planned 60 billion kroner ($9.4 billion) share sale backed by the government.
PDD Holdings Inc. posted better-than-expected results after China’s government ramped up stimulus to galvanize consumers and offset the economic fallout from US tariffs.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.2% as of 9:38 a.m. New York time
The Nasdaq 100 fell 0.3%
The Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 was little changed
The MSCI World Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.1703
The British pound fell 0.1% to $1.3507
The Japanese yen fell 0.4% to 147.49 per dollar
Cryptocurrencies
Bitcoin fell 1.3% to $111,262.04
Ether fell 2.9% to $4,646.05
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.28%
Germany’s 10-year yield advanced five basis points to 2.78%
Britain’s 10-year yield declined four basis points to 4.69%
The yield on 2-year Treasuries advanced three basis points to 3.73%
The yield on 30-year Treasuries advanced three basis points to 4.90%
Commodities
West Texas Intermediate crude rose 1.2% to $64.40 a barrel
Spot gold fell 0.1% to $3,366.85 an ounce
