Major US stock indexes were mixed on Friday (15th) after Federal Reserve (Fed) officials said it was still too early to talk about an interest rate cut in March next year, dampening recent market optimism.
As of press time, the Dow Jones Industrial Average fell nearly 60 points or nearly 0.2%, the Nasdaq Composite Index rose more than 40 points or nearly 0.3%, the S&P 500 Index fell nearly 0.1%, and the Philadelphia Semiconductor Index rose more than 0.5%.
Major US index futures were lower ahead of Friday’s open after New York Fed President and Federal Open Market Committee (FOMC) Vice Chairman John Williams cooled optimism about a rate cut next March. Williams told US media outlet CNBC that it was too early to consider a rate cut in March next year.
At the same time, the December New York Fed manufacturing index reported -14.50, well below the 2 expected by economists and well below the previous value of 9.10. The data revealed signs of a slowdown in US economic activity. The benchmark 10-year US Treasury note yield fell below 4% for the first time since August last year, and US Treasury bond prices have remained steady since then.
The Fed sparked a speculative frenzy this week by confirming speculation that it was ready to declare victory over inflation and move towards cutting interest rates without causing major damage to the economy. A Bank of America report citing data from EPFR Global showed that US stock funds enjoyed a ninth week of inflows, reaching $25.9 billion, the longest streak since December 2021.
As the week comes to a close, traders still have to contend with the year’s biggest quarterly options and futures ending on Friday and the potential for volatility. According to Tier1Alpha strategists, a whopping $3.1 trillion in open interest either expires or rolls over into the new year.
In other news, European Central Bank (ECB) President Christine Lagarde warned that policy makers were not ready to follow the Fed’s policy change, which somewhat dampened market excitement. Markets believe the central bank will start cutting interest rates in the first half of next year, which is ahead of schedule, a member of the ECB’s Governing Council said on Friday. Lagarde said yesterday that the bank had not discussed cutting interest rates at all.
“The contrast between a resilient US economy taking a hawkish stance and a weak European economy sticking to a hawkish stance creates a contrast,” Swissquote senior analyst Ipek Ozkardeskaya wrote in a note to clients. It is an unusual impression. “
From 22:00 Taipei time on Thursday (15th): Stocks in focus:
Shares of Intel (INTC-US) rose 2.43% to $46.28 a share in early trading.
Intel announced a series of new artificial intelligence (AI) products on Thursday during the company’s AI Everywhere event, including fifth-generation Xeon processors for enterprises and Core Ultra chips for personal computers (PCs). In addition, the company also claims that the performance of the third generation AI accelerator Gaudi 3 will be better than the flagship AI chip NVDA-US H100.
Shares of Tesla ( TSLA-US ) fell 0.52% in early trading to $249.75 a share
According to reports, Tesla will receive 2.63 billion pesos ($153 million) in factory construction incentives from the Mexican state of Nuevo Leon to build its next large factory in the state. The move shows local officials trying to ease concerns about delays in construction of the Tesla factory.
Shares of Costco (COST-US) rose 3.61% in early trading to $653.52 a share
Costco recently published a good financial report for the first quarter of fiscal year 2024, giving a strong start to the new year. The main reason is that the end of the year shopping season in the United States has begun, and consumers are buying enthusiastically optional goods, including gold bars, Thanksgiving Day, etc. Pumpkin pie is a hot seller.
Today’s key economic data:
- The New York Fed Manufacturing Index in the United States in December was -14.50, 2.0 expected, and the previous value was 9.10
- US industrial production in November reported a monthly rate of 0.2%, expected to be 0.3%, and the previous value – 0.9%
- The US Markit manufacturing PMI index in December was 48.2, expected 49.3, and the previous value was 49.4
- The US Markit services PMI index in December was 51.3, expected 50.6, and the previous value was 50.8
- The US Markit composite PMI index in December was 51.0, expected 50.5, and the previous value was 50.7
Wall Street Analysis:
As the US 10-year Treasury yield fell below the key 4% level, US “Bond King” Gundlach warned that this was a warning that the US economic outlook was not good. Gundlach said in an interview: “I think if the 10-year US Treasury yield falls below 4%, it will be like a fire alarm for the economy… the level of the 1-year US Treasury yield, there is a lot of room for downside still. The US economy will go down, which will have a chain reaction and we will have to print a lot of money.”
The Dow Jones Industrial Average hit record highs for two consecutive days after the Fed indicated that the threat of inflation was receding and the dot plot suggested three interest rate cuts next year. However, David Rosenberg, a major Wall Street short seller and founder of Rosenberg Research, warned that investors may be celebrating too early.
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