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Wall Street is on edge heading into the July consumer price report after sharp stock swings this month reignited fears over the fate of the economy. Economists are predicting that inflation remained broadly unchanged in July — a reading that should allow the Federal Reserve to start easing the brakes on the economy next month by cutting interest rates. But a sharper-than-expected slowdown in the Consumer Price Index could intensify worries that the economy is moving quickly toward a more pronounced downturn, while a surprise acceleration is likely to rein in rate cut expectations that investors are already counting on to support the market. That leaves investors in search of an inflation “sweet spot,” Chris Larkin, head of trading and investing at E-Trade, said in a statement: “cool enough that no one will be second-guessing the likelihood of a September rate cut, but warm enough to push aside the recession concerns that have rattled the markets recently.”

Persons: ” Chris Larkin, ” Organizations: Federal Reserve

Investors are poised for a report on Friday to show a slowdown in the pace of hiring in June, building on weak services and manufacturing data, and to firm up their expectations of interest rate cuts starting as soon as September. Signs of lower rates in the near future, which would make it cheaper for consumers and companies to borrow, have typically been accompanied by market rallies. The S&P 500 has repeatedly set fresh records and is up more than 16 percent this year. Economists are forecasting that the June jobs report will show a healthy labor market, albeit with fewer jobs added and an easing in wage growth. Earlier this week, widely watched surveys of manufacturing and services activity both came in lower than forecast.

Persons: Russell

Move over, Microsoft and Apple. On Tuesday, Nvidia leapfrogged two of tech’s most storied names to become the world’s most valuable public company, according to data from S&P Global. Just two years ago, the company’s market valuation was over $400 million. Now, in the span of a year, it has gone from $1 trillion to more than $3 trillion. Microsoft and Apple both fell, ending the day trailing the Silicon Valley chip maker.

Persons: Jensen Huang Organizations: Microsoft, Apple, Nvidia, P

☆ New Stock Exchange in Texas Takes Aim at N.Y.S.E. and Nasdaq
▼ + stars: | 2024-06-05 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

A start-up stock exchange headquartered in Dallas and backed by the financial powerhouses BlackRock and Citadel Securities is set to challenge the dominance of the New York Stock Exchange and Nasdaq in the listing and trading of companies and funds. The Texas Stock Exchange, or TXSE, has raised roughly $120 million from more than two dozen investors, including BlackRock and Citadel Securities as well as some unnamed business leaders, according to a statement on Wednesday. The exchange has yet to register with the Securities and Exchange Commission, which will be its primary regulator, but intends to do so later this year. It cannot begin operating without the S.E.C.’s approval. The announcement of the exchange was first reported by The Wall Street Journal.

Persons: ’ Organizations: BlackRock, Citadel Securities, New York Stock Exchange, Nasdaq, Texas Stock Exchange, Securities and Exchange Commission, Wall Street Locations: Dallas, BlackRock

Just as Wall Street appeared to come to terms with the idea of high interest rates sticking around for longer, a cooler-than-expected jobs report on Friday brought the idea of rate cuts back into the conversation. The Labor Department reported that job and wage growth in April came in lower than economists had expected, a shift after months of piping-hot labor market reports. The findings rekindled hopes that the Federal Reserve — which has been looking for signs that interest rates are slowing the economy — may yet cut rates before the end of the year. “This is the jobs report the Fed would have scripted,” said Seema Shah, chief global strategist at Principal Asset Management. The S&P 500 rose 1.3 percent on Friday, its best day in more than two months.

Persons: ”, Seema Shah, Russell Organizations: Labor Department, Federal, Asset Management

☆ Stocks Suffer Sharpest Weekly Decline of 2024
▼ + stars: | 2024-04-12 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Stocks slumped to a second consecutive weekly loss on Friday, as intensifying tension in the Middle East prompted caution among investors, adding to concerns about lingering inflation that had set off a retreat earlier in the week. The S&P 500 fell 1.5 percent on Friday in its worst day of trading since January, and ended the week with a drop of 1.6 percent, its worst weekly decline of the year. Other major indexes, including the Nasdaq Composite and Russell 2000, also fell on Friday. The Vix Volatility Index, a measure of investor expectations for market swings over the next 30 days — known across trading floors as Wall Street’s “fear gauge” — was elevated. The drop this week began after an inflation report on Wednesday showed unexpectedly stubborn increases in consumer prices, throwing into doubt the likelihood that the Federal Reserve will cut interest rates in the near future as the central bank seeks to keep the brakes on the economy and further slow the pace of rising prices.

Persons: Stocks Organizations: Nasdaq, Russell, Federal Reserve

☆ Wall Street Shudders on Signs of Unexpectedly Strong Inflation
▼ + stars: | 2024-04-10 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: 1 min

Signs of stubborn inflation rattled Wall Street on Wednesday, with stock prices sliding and government bond yields, which underpin interest rates throughout the economy, jolting higher. Other major indexes, including the tech-heavy Nasdaq Composite and the Russell 2000 index of smaller companies, also fell. The moves followed a consumer inflation report that came in hotter than expected, with prices rising 3.5 percent in March from a year earlier, marking another month of stubbornly high inflation. That made it harder for investors to dismiss earlier signs that the progress in cooling inflation was patchy. “The stalled disinflationary narrative can no longer be called a blip,” said Seema Shah, chief global strategist at Principal Asset Management.

Persons: Russell, ”, Seema Shah Organizations: Nasdaq, Asset Management

☆ Price of Gold, Seen as Hedge Against Inflation, Soars to New Heights
▼ + stars: | 2024-04-10 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: 1 min

Gold, typically seen as a haven in periods of economic turmoil, especially as a hedge against inflation, has risen sharply in price over the past month, even as the outlook for the economy has improved and inflation, although still elevated, is well below recent highs. The precious metal has set a series of record highs as it surged roughly $300, to $2,350 per troy ounce, since the start of March. The move has been attributed, at least in part, to a burst of gold buying from central banks around the world, including China. But investors said that central bank purchases did not fully explain such a sudden price increase. “It’s perplexing to anybody in the gold market,” said Chris Mancini, a gold portfolio manager at Gabelli Funds.

Persons: ”, Chris Mancini Organizations: Gabelli Funds Locations: China

☆ Stocks Jump as Nvidia Sets Off Tech Rally
▼ + stars: | 2024-02-22 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Stocks on Wall Street recorded their biggest gain in more than a year on Thursday, a day after Nvidia, which has become an emblem of the growth potential offered by artificial intelligence, reported record profits. The S&P 500 rose 2.1 percent, its best one-day performance since January 2023. The Nasdaq Composite index, which is chock-full of tech stocks like Nvidia, rose 3 percent, also its biggest one-day jump in over a year. After markets closed on Wednesday, Nvidia, which designs microchips used in the development of artificial intelligence, reported record revenue of over $22 billion for the final three months of 2023. Stock markets in China, Germany, France and Britain all ended the day higher.

Persons: microchips Organizations: Wall, Nvidia, Stock Locations: Japan, China, Germany, France, Britain

The NumbersThe S&P 500 climbed 0.6 percent on Friday to close at 5,026.61. Tech giants, including Apple, Microsoft, Meta, Amazon and Alphabet, have enormous sway over the index because of their size, and after they reported earnings last week, several of these stocks have soared. The rally hasn’t been limited to tech stocks: Disney, Ford and Chipotle, for instance, also reported earnings in the past week that beat analyst estimates and pushed their shares higher. Nearly 70 percent of the companies in the S&P 500 had reported earnings as of Friday, with three-quarters of those reports better than expected, according to FactSet. The gains in the S&P 500 have continued even after the Fed signaled that it wouldn’t move as quickly as investors had initially hoped.

Persons: Russell, —, underscoring, Jerome H, Powell Organizations: Nasdaq, Technology, Tech, Apple, Microsoft, Meta, Disney, Ford, Federal Reserve, Investors

☆ With Charlie Munger’s Death, Berkshire Loses a Custodian of Its Culture
▼ + stars: | 2023-11-29 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Shares of Berkshire Hathaway barely budged on Wednesday, a day after its vice chairman, Charlie Munger, died, reflecting the view among shareholders that Mr. Munger’s absence on the conglomerate’s day to day would have little impact on its future, even as they mourned the loss of the man who helped shape Berkshire’s culture. Mr. Munger, who helped build Berkshire into a global investing powerhouse, died at a California hospital on Tuesday morning, according to an announcement from Berkshire. He was just over a month short of his 100th birthday. Warren Buffett, the chairman and chief executive of Berkshire Hathaway, who built the company over decades with Mr. Munger’s steering, said it was his partner’s “inspiration, wisdom and participation” that had proved vital to Berkshire’s success. “Berkshire Hathaway could not have been built to its present status without Charlie,” Mr. Buffett said.

Persons: Berkshire Hathaway, Charlie Munger, Munger, Warren Buffett, Charlie, ” Mr, Buffett Organizations: Berkshire Locations: Berkshire, California

She said that it was still her basic expectation that the Fed would need to raise rates further. Investors appeared buoyed by the Fed officials’ comments. The two-year Treasury yield, which is sensitive to changes in investors’ interest rate expectations, fell noticeably on Tuesday morning. Fed officials have been nervously watching continued strength in the economy: Gross domestic product expanded at a breakneck 4.9 percent annual rate in the third quarter. The concern has been that continued solid demand will give companies the wherewithal to continue raising prices quickly.

Persons: Michelle Bowman, ”, ” Ms, Bowman Organizations: Fed, Treasury, Gross

Maybe I won’t set up that factory. These companies — the small, private enterprises that are responsible for roughly half the private-sector employment in the country — are already having to pay much more for debt. They fund their operations using cash from sales, business credit cards and private loans — all of which are generally more expensive options for financing payrolls and operations. Now, they’re paying 10 percent interest on short-term loans. Hiring within these firms has slowed, and their credit card balances are higher than they were before the pandemic, even as spending has slowed.

Persons: Ms, Sheth Organizations: National Federation of Independent Business, Bank of America Locations: ”

☆ Stocks Rally as Inflation Report Cements View the Fed Is Done With Raising Rates
▼ + stars: | 2023-11-14 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Stocks soared on Tuesday, with the S&P 500 on course for its best day of the year, after an inflation reading raised hopes that the Federal Reserve’s campaign to slow inflation may have reached its limits. The S&P 500 rose roughly 2 percent by midday on Tuesday, a gain it has failed to maintain for an entire trading day yet in 2023. The Russell 2000 index of smaller companies’ stocks, which are more exposed to the ups and downs of the economy, also rose sharply, climbing 4.5 percent. The stock gains reflected expectations that the Fed may not need to raise interest rates again, after new data showed consumer price inflation slowed in October. But Tuesday’s report helped cement a view in financial markets that the Fed’s efforts are working.

Persons: Stocks, Russell, — Organizations: Federal

☆ Huge Reversal in Bonds and Rally in Stocks Cap Wild Week for Markets
▼ + stars: | 2023-11-03 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: 1 min

Stocks and bonds rallied on Friday, extending a sharp reversal after fresh data about the health of the U.S. labor market capped a tumultuous week for investors. The 10-year government bond yield, which underpin rates on everything from mortgages to business loans, dropped more than 0.1 percentage points on Friday, another large decline for a market in which daily moves are often measured in hundredths of a point. Yields move inversely to prices. That helped to lift the stock market, which had sold off as rates rose in recent months. The S&P 500 was set to end the week almost 6 percent higher, on course for its best week of the year.

Organizations: Federal Reserve Locations: U.S

☆ Why Wall Street Is So Worried About ‘Refunding’
▼ + stars: | 2023-11-01 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Investors this week have fixated on a routine quarterly announcement of how the government plans to finance itself, a sign of how sensitive Wall Street has become to a rapid run-up in interest rates. On Wednesday, the Treasury Department said in its latest “refunding” announcement that it would issue an elevated amount of short-term debt later this month. It had earlier announced that it plans to borrow $776 billion in the last three months of the year, more than it ever has in the fourth quarter, to keep up with government spending and rising interest payments. The outsized attention on the Treasury Department’s announcement comes as a sharp rise in rates has pushed up the cost of government debt. The benchmark 10-year Treasury yield, indicative of what the government pays to borrow money for a decade, has risen by three-quarters of a percentage point since early August, the last time the Treasury Department updated the markets on its borrowing plans.

Organizations: Treasury Department, Treasury

The people who work the levers of Japan’s economy are in a bind: The country’s low interest rates, which they have long used to goose growth, are now well out of step with other big economies. The yen is at a near-record low against the U.S. dollar, threatening to inflict prolonged inflation on Japan, which for years suffered the opposite problem. On Tuesday, the central bank, the Bank of Japan, tried to thread the needle, announcing a policy that aims to nudge bond yields higher. Decisions by the Bank of Japan, led by Governor Kazuo Ueda, reverberate around the world, especially in American markets. Interest rates in the United States are well above Japan’s — yields on 10-year U.S. Treasury notes briefly pushed above 5 percent in September, a level not seen since 2007.

Persons: Kazuo Ueda Organizations: U.S ., Bank of Japan, Treasury Locations: Japan, Tokyo, reverberate, United States

☆ What’s Happening in the Bond Market?
▼ + stars: | 2023-10-26 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

The interest rates on mortgages, credit cards and business loans have shot up in recent months, even as the Federal Reserve has left its key rate unchanged since July. The focal point has been on the 10-year U.S. Treasury yield, which underpins many other borrowing costs. The 10-year yield has risen a full percentage point in less than three months, briefly pushing above 5 percent for the first time since 2007. Strong growth and stubborn inflationInitially, when the Fed first began to fight inflation, it was short-term market rates — like the yield on two-year notes — that rose sharply. Those increases closely tracked the increases in the Fed’s overnight lending rate, which rose from near zero to above 5 percent in about 18 months.

Persons: ”, Subadra Rajappa, — Organizations: Federal Reserve, Treasury, Fed

☆ Investors Fret as Daunting Bond Market Milestone Comes Into View
▼ + stars: | 2023-10-20 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

One of the most important interest rates in the world this week flirted with a level it hadn’t reached in more than 16 years, putting pressure on the economy and the stock market. The 10-year Treasury yield, a measure of how much it costs the U.S. government to borrow that is widely used as a benchmark for all types of lending, brushed against 5 percent for the first time since mid-2007. The steep rise in the 10-year yield in recent months has captured the attention of investors, economists and policymakers. This “sudden, rapid increase” has shaken faith in the continued resilience of the economy, said economists at the rating agency Moody’s, threatening “to knock the U.S. economic expansion off course.”The Federal Reserve controls short-term interest rates, which ripple through the economy via market-based rates like Treasury yields and to borrowing costs on longer-term debt like mortgages and company bonds.

Organizations: Treasury, Federal Reserve

☆ A Sudden Bond Binge on Wall St. Reflects Rising Optimism
▼ + stars: | 2023-09-08 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Despite the parallels in sentiment, the wave of bond issuance itself weighed on stocks this week. The bumper bond supply pushed bond prices lower, which raises yields. Stock prices are sensitive to increases in interest rates, such as bond yields, because it can raise costs for companies. The S&P 500 is set for a decline this week but is still up more than 16 percent this year. This week, analysts at Goldman Sachs lowered their forecast probability of a recession in the United States to just 15 percent.

Persons: it’s, ”, Andrew Brenner, Goldman Sachs Organizations: National Alliance Securities, Goldman, Bank of America Locations: China, Europe, United States

When Jerome H. Powell spoke at the Federal Reserve Bank of Kansas City’s annual conference in Jackson Hole, Wyo., last year, inflation had recently topped 9 percent and the Fed was raising rates at a breakneck pace to wrestle down price increases. Mr. Powell used the platform to offer a stern warning that central bankers would keep at it until the job was done. Higher rates have cooled the housing market and, together with healing supply chains and cheaper gas prices, lowered inflation notably — to 3.2 percent in July. Instead of warning that the central bank is prepared to push the economy into a recession if that is necessary to calm rapid inflation, Fed officials today are increasingly suggesting that they might pull off what once seemed unlikely: cooling the economy without tanking it. But many economists and investors think that he may be able to strike a slightly less aggressive tone than he did last year.

Persons: Jerome H, Powell Organizations: Federal Reserve Bank of Locations: Federal Reserve Bank of Kansas, Jackson

☆ Wall St. Weighs the Effect of Weaker China and Stronger U.S.
▼ + stars: | 2023-08-15 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

The world’s two largest economies — China and the United States — are moving in sharply different directions. Investors are wary of China’s weakening growth, deflation and precarious real estate market, but they have largely shrugged off these concerns so far. Investors are, however, flinching at signs that the U.S. economy is unexpectedly strong, which could prompt a stronger response by the Federal Reserve as it tries to rein in inflation. The S&P 500 stumbled on Tuesday, falling about 1 percent, extending the decline recorded this month to more than 3 percent. The move on Tuesday came amid several signs of weakness in China.

Organizations: United, Investors, Federal Reserve Locations: China, United States, U.S

The downgrade of the United States’ debt by a major ratings firm is a damning indictment of the country’s fractious politics and a blot on its financial record that is unlikely to be quickly erased. But many investors and analysts say it won’t affect the government’s ability to keep borrowing money. On Tuesday, Fitch Ratings lowered the credit rating of the United States one notch to AA+ from a pristine AAA. The firm, citing a “deterioration in governance” along with America’s mounting debt load, suggested that it could be a long time before that decision was reversed. The United States came within days of defaulting on its debt this spring as Republican lawmakers refused to lift the cap unless President Biden made concessions on spending.

Persons: ”, Richard Francis, “, Biden Organizations: United, Fitch, AAA, P, Treasury Department Locations: United States, Americas

☆ Wall St. Pessimists Are Getting Used to Being Wrong
▼ + stars: | 2023-07-28 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Beaten as they might be by the stock market’s rally, worriers on Wall Street still question how long it can last. After starting the year with dour warnings about the economy, many investors and analysts have changed their minds. Marquee earnings from some large tech companies, like Meta and Alphabet, helped drive stock prices higher. Consumer-facing companies like Coca-Cola and Unilever that are dependent on households continuing to spend also posted bumper financial results. The benchmark sits roughly 5 percent away from the record it reached in January 2022.

Persons: Jerome H, Powell Organizations: Consumer, Cola, Unilever, Federal Reserve

“Most of us have been wrong on the timing of things going bad, and right now there is really not much of a problem. That means it can be years before a company needs to refinance those bonds at higher interest rates. The longer inflation remains elevated, the longer interest rates will also stay high, meaning that an increasing number of companies could be forced to shoulder higher borrowing costs. Their latest economic projections suggested that interest rates could be hovering near 4.6 percent at the end of 2024. That would be lower than where they are now, but still a big change after years of near-zero interest rates.

Persons: “, ”, John McClain Organizations: Brandywine Global Investment Management

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