The Dow Jones Industrial dropped 0.06 percent at the close. and amounted to 38,949.02 points. The S&P 500 lost 0.17% at the end of the day. and amounted to 5,069.76 points. The Nasdaq Composite fell 0.55%. and closed the session at 15,947.74 points. The Russell 2000 small-cap index lost 0.75 percent to 2,040.31 points. The VIX volatility index increased by 3.05%, to 13.84 points.
The base scenario is three rate cuts in 2024.
“Investor sentiment suggests the market remains uncertain and there is a risk of a correction when another negative catalyst hits,” said Kevin Gordon, senior investment strategist at Charles Schwab, in the report.
On Thursday, the PCE deflator reading for January will be released – the measure of inflation preferred by the US Fed, and on Friday Eurostat will release the HICP estimate for February from the Eurozone. Both readings will be interpreted in the context of the debate about the appropriate moment to start reducing interest rates by the Federal Reserve and the European Central Bank.
Federal Reserve member Michelle Bowman signaled that she is in no hurry to cut interest rates in the US, especially given the risk of rising inflation, which could hinder progress in controlling price pressures or even lead to their renewed increase. “PCE inflation data may provide some insight into the potential pace and magnitude of Fed rate cuts in 2024.” – UBS analysts wrote in the report. “While the Fed could raise interest rates further if inflation accelerates again, our base case is three rate cuts in 2024 (75 bps), starting in June,” they added.
According to Susannah Streeter, director of money and markets at Hargreaves Lansdown, the PCE reading could show that US inflation is persistent. “The road out of skyrocketing inflation was expected to be a bumpy one, but the U.S. economy has proven even more resilient than expected, with a strong labor market boosting consumer purchasing power,” Streeter said.
Yuting Shao, macro strategist at State Street Global Markets, said individual data releases are important for the data-dependent Fed and will have an impact on risk sentiment given investors’ near-neutral stance.
eBay’s quarterly results exceeded analyst expectations
Applied Materials fell more than 2.5%. following a subpoena issued in February by the U.S. Securities and Exchange Commission requesting information regarding certain shipments to customers in China. Beyond Meat rose almost 31%. The maker of plant-based meat substitutes said it will raise product prices and cut costs this year after exceeding quarterly revenue estimates.
E-commerce platform eBay gained almost 8%. The company’s quarterly results exceeded analysts’ expectations. First Solar increased by 3%. after the solar panel maker reported fourth-quarter profit. Bumble fell almost 14%. after the dating app’s owner forecast disappointing first-quarter revenue.
US Gross Domestic Product increased by 3.2% in the fourth quarter. on an annualized basis (SAAR) quarter to quarter – the Department of Commerce reported in the second calculation. 3.3 percent was expected. vs. +3.3 percent in the first enumeration. In Q3, US GDP increased by 4.9%, and in Q2, GDP increased by 2.1%. Private consumption increased by 3% in the fourth quarter, compared to 3.1%. in the previous quarter. 2.8 percent was expected. The core PCE deflator amounted to 2.1% in Q4 on an annualized Q4 basis, compared to forecasts of 2%. and 2 percent in the previous quarter. The PCE deflator is the Federal Reserve’s preferred measure of inflation.
US wholesalers’ inventories fell 0.1% in January. on a month-to-month basis – the Department of Commerce reported in its preliminary reading. Expected +0.1%. A month earlier, stocks increased by 0.4%. US crude oil inventories last week increased by 4.2 million barrels, or 0.95%, to 447.163 million barrels. Gasoline stocks fell by 2.8 million barrels, or 1.15 percent, to 244.205 million barrels during this time. Reserves of distilled fuels, including heating oil, decreased by 0.5 million barrels, or 0.4 percent, to 121.141 million barrels.
On the oil market, WTI futures for March are trading at USD 78.41 per barrel, down 0.58%, and April Brent futures are down 0.07%. up to USD 83.59/b.
