Wall Street’s main indexes edged lower in choppy trading after monthly producer prices rose as expected, with investors awaiting Fed Chair Jerome Powell’s imminent comments for clues on the outlook for interest rates.
The producer price index (PPI) for final demand rose 0.2 per cent on a monthly basis in October, in line with forecasts, though the annual rise of 2.4 per cent was a touch higher than expectations.
Meanwhile, jobless claims dropped 4000 to a seasonally adjusted 217,000 for the week ended November 9, lower than forecast.
“The data continues to suggest that inflation and employment continue on their trajectory toward a soft landing,” said Keith Buchanan, senior portfolio manager at Globalt Investments.
Buchanan, however, noted that if Treasury yields keep moving higher, that would be an indication the economy might not achieve a soft landing.
Changing inflation expectations are visible in the bond market, where the US 10-year Treasury yield has ticked up to its highest since July.
Traders slightly trimmed bets on an interest rate cut at the Fed’s December meeting. They now expect a 79.1 per cent chance of a 25-basis point reduction from 82 per cent prior to the data, according to the CME FedWatch tool.
The Dow Jones Industrial Average fell 36.90 points, or 0.08 per cent, to 43,921.29, the S&P 500 lost 9.36 points, or 0.16 per cent, to 5,976.02, and the Nasdaq Composite lost 34.83 points, or 0.18 per cent, to 19,195.90.
Losses on the blue-chip Dow were limited by a 10.4 per cent gain in Walt Disney after the company reported quarterly earnings that topped Street estimates.
Rate-sensitive growth stocks such as Tesla and Alphabet lost more than one per cent each. The real estate sector was the biggest decliner on the benchmark index.
Powell will provide an update on his economic outlook to business leaders in Dallas, a day after some Fed policymakers shifted their attention back to inflation risks as they weighed when, and how fast and far, to cut interest rates.
Fed governor Adriana Kugler said on Thursday the central bank has made considerable progress in working to achieve its job and inflation goals, though noting challenges in bringing inflation back to target.
A post-election rally in equities appeared to be waning, even as focus turned to the potential inflationary pressures from policies under President-elect Donald Trump’s administration.
Shares of cryptocurrency-focused companies rose as bitcoin continued to climb on hopes of favourable policies under Trump. Miner MARA Holdings rose 2.6 per cent and bitcoin buyer MicroStrategy was up 4.6 per cent.
Tapestry gained 8.8 per cent to hit its highest since early 2014, after the Coach parent said it was terminating its $US8.5 billion ($A13.1 billion) deal for Capri Holdings after the deal was blocked by a US judge. Capri’s shares fell 4.2 per cent.
Remarks from Fed official John Williams are expected later on Thursday.
Advancing issues outnumbered decliners for a 1.29-to-1 ratio on the NYSE and a 1.12-to-1 ratio on the Nasdaq.
The S&P 500 posted 16 new 52-week highs and six new lows, while the Nasdaq Composite recorded 37 new highs and 61 new lows.
