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☆ Japan Raises Interest Rates for First Time in 17 Years
▼ + stars: | 2024-03-18 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

Japan’s central bank raised interest rates for the first time since 2007 on Tuesday, pushing them above zero to close a chapter in its aggressive effort to stimulate an economy that has long struggled to grow. Negative interest rates — which central banks in some European economies have also applied — mean depositors pay to leave their money with a bank, an incentive for them to spend it instead. But Japan’s economy has recently begun to show signs of stronger growth: Inflation, after being low for years, has sped up, cemented by larger-than-usual increases in wages. Even after Tuesday’s move, interest rates in Japan are far from those in the world’s other major developed economies. The Bank of Japan’s target policy rate was raised to 0.1 percent from minus 0.1 percent.

Organizations: Bank of Japan Locations: Japan

☆ 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

☆ Nvidia Is a Must-Buy. Or Is It?
▼ + stars: | 2024-02-22 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

In 2002, after the dot-com bubble burst and Sun Microsystems swooned, the company’s co-founder Scott McNealy highlighted the folly of Wall Street analysts who favored one particular financial metric to gauge a stock’s worth: its price relative to the company’s sales. Mr. McNealy was musing about the “price to sales” ratio — an important measure of a company’s value relative to how much cash it generates. A high ratio can be justified if investors think a company has room to grow; a low ratio typically signals that investors think the company is accurately valued. Even if Sun passed on every dollar it was making at the time to investors, it would have taken them a decade to recover their investment. “Do you realize how ridiculous those basic assumptions are?” Mr. McNealy told Businessweek.

Persons: Scott McNealy, McNealy, Sun Organizations: Sun Microsystems, Street, Businessweek

☆ Stocks in Japan Hit Record High, Surpassing 1989 Peak
▼ + stars: | 2024-02-22 | by ( Joe Rennison | Jason Karaian | ) www.nytimes.com time to read: +1 min

Stocks in Japan have looked cheap because of a weak yen, which has been a boon to exporters that make their profits overseas. Important changes to the corporate sector have also given shareholders more rights, allowing them to push for changes that favor their stock holdings. Earnings at large Japanese companies are set to rise by more than 40 percent in their latest quarterly results, according to Goldman Sachs. The biggest companies, like Toyota and SoftBank, have also reported some of the biggest earnings surprises, the bank’s analysts noted. Toyota recently rose to a record market value for a Japanese company, about $330 billion, surpassing the mark set in 1987 by the telecom conglomerate NTT.

Persons: haven’t, Goldman Sachs Organizations: Japan Exchange Group, Toyota, NTT Locations: Japan, China

☆ Wall Street Is Already Placing Bets on the Biden-Trump Rematch
▼ + stars: | 2024-02-20 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

Nine months ahead of the presidential election, investors are already thinking about how financial markets might respond to the outcome of the vote, and how they should trade to prepare for it. Stock markets have soared to record highs in recent weeks, while government bond yields, which underpin interest rates for consumers and companies, are down from a recent peak in October. Despite the uncertainty of making political predictions, money managers are already contemplating how the election could alter the mood in markets. Red wave, blue wave or divided government? Those policies, which cut the government’s revenue and raised its borrowing needs, also propelled a sharp rise in government bond yields.

Persons: Donald J, Trump Organizations: Stock, Republican, Republicans Locations: —

☆ Stocks Sink as Stubborn Inflation Resets Fed Rate Forecasts
▼ + stars: | 2024-02-13 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

Stock markets tumbled on Tuesday as investors slashed their bets on the Federal Reserve taking the brakes off the economy in the coming months, after hotter-than-expected inflation data led traders to expect interest rates will remain higher for longer. The benchmark S&P 500 stock index fell over 1 percent in early trading. Investors still expect the Fed to pull inflation back to manageable levels without inflicting too much pain on the broader economy. But that forecast was put under pressure on Tuesday by a consumer inflation report that showed prices rising more quickly than had been forecast. The consumer data “came in stronger than either the Fed or the market wanted or expected,” said Greg Wilensky, head of U.S. fixed income at Janus Henderson Investors.

Persons: ”, Greg Wilensky, Janus Henderson Organizations: Federal Reserve, Janus, Janus Henderson Investors

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

☆ The S&P 500 Through the Prism of a ‘Magnificent 7’
▼ + stars: | 2024-01-27 | by ( Joe Rennison | ) www.nytimes.com time to read: 1 min

The group’s name, an allusion to a 1960s western starring Steve McQueen, was coined by the Bank of America analyst Michael Hartnett early last year. It consists of Google’s parent, Alphabet; Amazon; Apple; Facebook’s parent, Meta; Microsoft; Nvidia; and Tesla. These stocks rose an average of 105 percent in 2023, led by Nvidia. Microsoft itself rose 57 percent. The S&P 500 index also had a good run in 2023, much better than was expected at the start of the year, when inflation and higher interest rates clouded the outlook.

Persons: Steve McQueen, Michael Hartnett Organizations: Bank of America, Meta, Microsoft, Nvidia

☆ As China’s Markets Stumble, Japan Rises Toward Record
▼ + stars: | 2024-01-26 | by ( Joe Rennison | Alexandra Stevenson | ) www.nytimes.com time to read: +1 min

There’s a shift underway in Asia that’s reverberating through global financial markets. Stocks stemmed their slide only when Beijing recently signaled its intention to intervene but remain far below previous highs. But there’s one unforeseen reversal already underway: a change in perception among investors about China and Japan. Seizing on this shift, Japan’s prime minister, Fumio Kishida, addressed more than 3,000 global financiers gathered in Hong Kong this week for a conference sponsored by Goldman Sachs. It was the first time a Japanese prime minister had given a keynote address at the event.

Persons: Stocks, Fumio Kishida, Goldman Sachs Organizations: Asia that’s, Nikkei Locations: Asia, China, Stocks, Beijing, Japan, Hong Kong

☆ These Seven Tech Stocks Are Driving the Market
▼ + stars: | 2024-01-22 | by ( Karl Russell | Joe Rennison | ) www.nytimes.com time to read: +8 min

These Seven Tech Stocks Are Driving the MarketThe S&P 500 is at a new high, and investors have just a handful of stocks to thank for it. Market value of S&P 500 companies These seven companies account for 29% of the S&P 500’s market value Alphabet $1.8 tril. Amgen Linde Qualcomm Intel Pfizer These seven companies account for 29% of the S&P 500’s market value Market value of S&P 500 companies Thermo Fisher Scientific McDonald's Cisco Sys. Berkshire Hathaway UnitedHealth Costco These seven companies account for 29% of the S&P 500’s market value Market value of S&P 500 companies Thermo Fisher Scientific Abbott Labs. Indeed, based on price alone, the seven big tech stocks were not the best performing in the S&P 500.

Persons: Jan, it’s, Berkshire Hathaway Tesla, Health Eli Lilly, Johnson Procter, Netflix Walt Disney, Amgen Linde, Wells, Merck Mastercard Eli Lilly Johnson, Johnson, JPMorgan Chase, Berkshire Hathaway, Wells Fargo Walt Disney Pfizer Amgen, Phillips Goldman, Mastercard Eli Lilly Abbvie Johnson, Chase Organizations: Apple, Meta, Microsoft, Nvidia, Tesla, Berkshire, JPMorgan Chase United, Health, Broadcom Johnson, Gamble Exxon Mobil Home Depot Mastercard Costco Walmart Oracle Merck Accenture, Mobile Wells Fargo PepsiCo Comcast, Intuit, Fisher, Netflix Walt, Netflix Walt Disney Cisco Sys, Verizon Abbott Labs, Amgen, Amgen Linde Qualcomm Intel Pfizer, Cisco Sys, Abbott Labs, Accenture Netflix Linde Intel PepsiCo Oracle Walmart, Wells Fargo Walt Disney Qualcomm, Mobile Comcast Intuit, Verizon, Pfizer, Merck Mastercard, Johnson Nvidia, Visa Exxon Mobil Apple, Broadcom, JPMorgan, JPMorgan Chase Procter, Gamble, Costco, Fisher Scientific Abbott Labs, Cisco Systems Accenture PepsiCo, Netflix Linde Intel Oracle Walmart, Wells Fargo Walt Disney Pfizer, Mobile, Comcast Intuit Verizon Qualcomm Amazon, Merck Uber Tech, P Global American, Phillips Goldman Sachs IBM UPS Honeywell Boeing, Mastercard, Adobe Exxon Mobil Apple, Broadcom Chevron Home, Micro Devices, Chase Procter, Berkshire Hathaway UnitedHealth Bank of America Costco, Royal, General, Amazon, Big Tech, IBM, Exxon, General Electric, & & + + + Locations: Berkshire, Royal Caribbean

☆ Stocks Hit New High for the Year, Reversing the Summer’s Swoon
▼ + stars: | 2023-12-01 | by ( Joe Rennison | ) www.nytimes.com time to read: 1 min

After several twists and turns this year, stock investors are in a celebratory mood. The reversal has come as investors have cheered signs that the Federal Reserve has finished raising interest rates, the primary tool in the central bank’s effort to slow inflation. Those high rates have been a drag on corporate valuations because they raise costs for consumers and companies and give allure to investments outside the stock market. Jerome H. Powell, the Fed chair, appeared to add to investors’ bullish mood on Friday, suggesting that the economy continues to cool as expected. “We’re getting what we wanted to get, we now have the ability to move carefully,” Mr. Powell said at an event.

Persons: Jerome H, Powell, ’, “ We’re, Mr Organizations: Federal Reserve

☆ 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

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: ”

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

☆ 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

The report is also expected to find that gains in average hourly earnings were solid but decelerated to 4 percent from a year earlier. The September report showed an unexpectedly strong gain of 336,000 jobs — a figure that will be revised Friday — and a year-over-year wage gain of 4.2 percent. has reached tentative contract agreements with the three major U.S. automakers and told striking members to return to their jobs. “We expect the October employment report to show a large deceleration in job growth, although the moderation will be overstated by the impact of striking autoworkers,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said in a note. “Excluding those workers,” she added, “job growth will still be relatively robust, although narrowly based.”Since early 2022, the benchmark interest rate set by the Federal Reserve has surged from near zero to more than 5 percent.

Persons: Nancy Vanden Houten, Jerome H, Powell, Mr, “, ” Organizations: Bloomberg, United Automobile Workers, Oxford Economics, Federal Reserve

Persons: Nancy Vanden Houten, Jerome H, Powell, Mr, “, ” Organizations: Bloomberg, United Automobile Workers, Oxford Economics, Federal Reserve

☆ 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

PinnedFederal Reserve officials are expected to leave interest rates unchanged at their meeting on Wednesday, buying themselves more time to assess whether borrowing costs are high enough to weigh down the economy and wrestle inflation under control. Central bankers have already raised interest rates to a range of 5.25 to 5.5 percent, the highest level in 22 years. At least a few officials might stop expecting another quarter-point rate move this year, predicting instead that interest rates have already reached their peak. If, on the other hand, officials expect to lower rates by less in 2024, it could be a signal that policymakers expect inflation to prove more stubborn. Fed officials will release fresh economic forecasts.

Persons: Jerome H, Powell, ”, Antúlio Bomfim, Powell’s, “, William English Organizations: Federal Reserve, Fed, Trust Asset Management, United Auto Workers, Yale Locations: America, Panama

Aides said that President Biden urged both sides of the dispute to stay at the negotiating table. Just before the strike vote, Mr. Biden called Shawn Fain, the president of the U.A.W. How Mr. Biden navigates the situation could have a significant impact on his hopes for re-election. Mr. Biden won the state over former President Donald J. Trump with just over 50 percent of the vote. “They talk about labor, but they don’t say ‘union.’ It’s ‘union.’ I’m one of the — I’m proud to say ‘union.’ I’m proud to be the most pro-union president.”

Persons: Biden, Biden’s, “, ” Mr, “ You’ve, ”, Eddie Vale, You’ve, Vale, Shawn Fain, Donald J, ’ ”, ’ It’s, ’ Organizations: United Auto Workers, Republican, White, Democratic, AFL, CNN, Trump, Labor Locations: Michigan, America, United States, Philadelphia

☆ 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

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