Stocks fall as investors grapple with Fedspeak and earnings mix-up

U.S. stocks edged lower on Thursday as optimism over lower inflation and a Federal Reserve policy shift waned, while Wall Street weighed in on mixed corporate earnings.

The S&P 500 (^GSPC) was down 0.3% after coming off a session lower of more than 1%, while the Dow Jones Industrial Average (^DJI) was down about 0.1%, losing more than 300 points. The tech-focused Nasdaq Composite ( ^IXIC ) fell 0.2%.

Comments from St. Louis Federal Reserve President James Bullard weighed on investor sentiment on Thursday, as he said the Fed’s monetary tightening campaign has had a “limited impact” on inflation so far, and that even the ensuing dovish policy has pushed inflation higher. said it was necessary. federal funds at least another interest rate.

Investors are anticipating a productive day of Fedspeak, with several Fed policymakers scheduled to make public statements across the country on Thursday.

In the spotlight of economic data, claims for unemployment insurance fell last week, near historic lows even as many technology companies reported layoff plans. Initial jobless claims, the most timely snapshot of the labor market, fell 4,000 to 222,000 in the week ended Nov. 12 from the previous week, the Labor Department said on Thursday.

The recent bullish trend in equity markets following strong October retail sales data has lost steam after offsetting hopes for a change in central bank policy, recently rekindled by a string of light inflation reports. An earnings miss from Target also weighed on sentiment in Wednesday’s session, as the company cited inflation and a worsening economic backdrop ahead of the key holiday shopping season.

Other peers in the sector fared better during this period.

Shares of Macy’s ( M ) rose more than 7% at the open after the department store giant raised its full-year earnings guidance, fueled by strong demand in the luxury areas of its business and beating estimates. Kohl’s ( KSS ), meanwhile, beat earnings expectations but pulled back its full-year forecast due to “significant” macroeconomic headwinds and an unexpected CEO transition. Shares fell nearly 3% to start the session.

Shares of Bath & Body Works ( BBWI ) jumped 26% in early trading after the personal care and home fragrance maker raised its full-year profit forecast. Retailers Walmart ( WMT ), Lowe’s ( LOW ), Home Depot ( HD ) beat analysts’ estimates.

Nvidia ( NVDA ) Chief Executive Officer Jensen Huang said strong chip demand will help the company weather potential economic headwinds as it heads into the final stages of earnings season — enough to offset losses in its gaming business. Shares lost 1%.

Machine maker Cisco Systems ( CSCO ) saw shares rise 3% after the company delivered a positive revenue forecast and said it was cutting its workforce and reducing office space.

U.S. Senate Minority Leader Mitch McConnell (R-KY) speaks during a news conference after being elected minority leader at the U.S. Capitol on Nov. 16, 2022 in Washington, U.S., Nov. 16, 2022. REUTERS/Elizabeth Frantz

Meanwhile, in Washington, Republicans won a majority in the House of Representatives on Wednesday, splitting control of the US Congress – a positive sign for investors as stocks have historically performed better in political gridlock.

However, strategists argue that inflation and economic conditions remain a focus for markets. Seema Shah, Chief Global Strategist at Core Asset Management, said the result should be “largely irrelevant to the broader market outlook”.

“Instead, it is historically high inflation, the Fed’s inflationary response, and the resulting recession risk, along with key structural policy decisions that will determine the direction of the market.”

In this regard, Federal Reserve Bank of San Francisco President Mary Daly said in an interview with CNBC that while the federal funds rate could reach a range of 4.75-5.25%, suspending interest rates is not currently an option.

But Federal Reserve Governor Christopher Waller said on Wednesday that recent economic data made him more comfortable with the possibility of a 50 basis point hike at the central bank’s December meeting.

Goldman Sachs raised its expectations for a peak federal funds rate to 5-5.25%, adding another quarter of a hike to its May 2023 forecast, while forecasting a 0.50% rise next month.

Alexandra Semenova is a correspondent for Yahoo Finance. Follow him on Twitter @alexandraandnyc

Click here for the latest trending stocks from the Yahoo Finance platform

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Download Yahoo Finance for apple or Android

Follow Yahoo Finance Twitter, Facebook, Instagram, Flipboard, LinkedInand YouTube

Source link