Economy

S&P, Nasdaq muted as markets brace for inflation data, Fed meeting

Published

5 months ago

December 12, 2023

S&P, Nasdaq muted as markets brace for inflation data, Fed meeting

© Reuters. FILE PHOTO: Traders gather at the post that trades Alaska Airlines stock on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 4, 2023. REUTERS/Brendan McDermid/File Photo

By Shristi Achar A and Johann M Cherian

(Reuters) – The was muted and Nasdaq inched lower on Monday in the run-up to an action-packed week that includes the Federal Reserve’s policy meeting and inflation data, both of which will test investor optimism about monetary policy easing next year.

The upbeat sentiment around stabilizing interest rates and robust quarterly earnings caused equities to rebound towards the end of the year, with the benchmark S&P 500 hitting its highest intra-day level of the year.

The S&P 500 and Nasdaq also notched their highest closing since early 2022 on Friday, after data showed nonfarm payrolls were higher than expected, underscoring hopes that the world’s largest economy could control inflation without slipping into a recession.

Focus now shifts to the Consumer Price Index (CPI) data due on Tuesday, which is expected to show headline inflation remaining unchanged in November, and the Fed’s last interest rate decision of the year on Wednesday.

“Investors are thinking how long this advance will last and if it is the beginning of a new meaningful leg higher,” said Sam Stovall, chief investment strategist at CFRA Research.

“The CPI data tomorrow should confirm that the trend in inflation is downward and that the quantitative tightening is causing inflationary trends to decline, while at the same time not throwing us into recession.”

While money markets have almost fully priced in a rate-hike pause in the upcoming meeting, bets of a rate cut next year have been seeping in, with traders seeing a 39% chance of at least a 25-basis-point cut in March 2024 and a 71.4% chance in May, according to the CME Group’s (NASDAQ:) FedWatch tool.

At 10:19 a.m. ET, the was up 56.84 points, or 0.16%, at 36,304.71, the S&P 500 was up 1.88 points, or 0.04%, at 4,606.25, and the was down 33.78 points, or 0.23%, at 14,370.19.

Elsewhere, the European Central Bank and the Bank of England, among others, are also scheduled to deliver their interest rate decisions later this week.

The tech-heavy Nasdaq was under pressure, with megacaps including Alphabet (NASDAQ:) and Amazon.com (NASDAQ:) shedding over 2% each, while chip makers like Micron Technology (NASDAQ:) and Broadcom (NASDAQ:) cushioned losses, adding 2% and 4%, respectively.

Limiting losses on the blue-chip Dow, Nike (NYSE:) added 1.4% after brokerage Citigroup upgraded its stock to “buy” from “neutral”.

Among other movers, Macy’s (NYSE:) soared 16.6% after an investor group consisting of Arkhouse Management and Brigade Capital made a $5.8 billion offer to take the department store chain private, according to a source.

Cigna (NYSE:) jumped 15.6% – after the health insurer ended its attempt to negotiate the acquisition of rival Humana (NYSE:), according to sources – and announced a $10 billion share buyback plan.

Crypto stocks like Riot Platforms (NASDAQ:), Coinbase (NASDAQ:) and Marathon Digital (NASDAQ:) slid between 4.4% and 10.5% as bitcoin fell to a week’s low.

Declining issues outnumbered advancers for a 1.04-to-1 ratio on the NYSE and for a 1.35-to-1 ratio on the Nasdaq.

The S&P index recorded 46 new 52-week highs and no new lows, while the Nasdaq recorded 72 new highs and 75 new lows.

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

4 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

4 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

4 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.