(Bloomberg) — Stocks and bonds struggled to find solid footing as traders weighed mixed data on US spending and inflation for clues on the Federal Reserve’s next steps.
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S&P 500 contracts swung between gains and losses after the US benchmark finished higher for a sixth straight session. Nasdaq 100 futures underperformed as disappointing forecasts from Intel Corp. and KLA Corp. weighed on chipmakers. Two-year US yields rose, while rates on longer maturities retreated.
The Fed’s preferred gauge of underlying inflation cooled to an almost three-year low even with robust holiday spending, keeping the debate alive over whether officials will soon cut borrowing costs.
Wall Street’s Reaction:
“The Fed’s job is basically done, and they have a good argument to cut rates and help stem risks in the job market. Of course, the Fed may opt to be patient and wait for more evidence that inflation is in the bag. But markets see the evidence, and they’re preparing for cuts in the next few months.”
“We don’t expect December’s data will materially shift March cut odds ahead of the weekend, and instead we’ll look for next week’s supply announcements, FOMC decision, and payrolls print to quickly take the market’s focus as the PCE print is digested.”
“We view today’s PCE and Personal Spending data as bullish for both the Fed’s path to their 2% target and also for the stock market. Based on strong recent GDP data and jobs data, we expect the first rate cut to be in the May-June period. If jobs and or economic data softens a bit and inflation continues to drop quickly, that could increase the chances of a rate cut in March, but that is not our base case yet.”
Elsewhere, Bitcoin rose past $41,000 amid a slowdown in outflows from the $20 billion Grayscale Bitcoin Trust that strategists said may help to stanch a two-week slump in the token. Oil dipped — but was still heading for the biggest weekly gain since October — as lower US stockpiles and the prospect of more government stimulus in China helped propel crude out of its recent range.
Corporate Highlights:
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American Express Co. said it’s sticking to its long-term profit and revenue goals and forecast earnings for 2024 that topped analysts’ estimates.
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Visa Inc. posted a profit that beat Wall Street predictions as credit-card spending climbed amid strong US economic growth.
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T-Mobile US Inc. reported earnings that missed analysts’ estimates, overshadowing a surprisingly strong increase in new mobile phone subscribers.
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Saudi Aramco, the world’s largest oil company, is continuing to send tanker loads of crude and fuels through the southern Red Sea, where Houthi militants have for months been menacing merchant ships in response to Israel’s war in Gaza.
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 9 a.m. New York time
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Nasdaq 100 futures fell 0.2%
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Futures on the Dow Jones Industrial Average were little changed
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The Stoxx Europe 600 rose 1.2%
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The MSCI World index rose 0.2%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.2% to $1.0871
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The British pound rose 0.3% to $1.2749
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The Japanese yen was little changed at 147.67 per dollar
Cryptocurrencies
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Bitcoin rose 2.8% to $41,021.5
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Ether rose 1% to $2,240.08
Bonds
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The yield on 10-year Treasuries was little changed at 4.12%
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Germany’s 10-year yield was little changed at 2.28%
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Britain’s 10-year yield declined two basis points to 3.96%
Commodities
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West Texas Intermediate crude fell 0.9% to $76.68 a barrel
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Spot gold rose 0.2% to $2,024.24 an ounce
This story was produced with the assistance of Bloomberg Automation.
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