Wall Street is hanging near its 20-month high Tuesday after a mixed set of reports kept questions alive about whether the U.S. economy can pull off a perfect landing that kills high inflation and avoids a recession.
Quick Read
- Wall Street Near 20-Month High: Despite mixed economic reports, Wall Street is close to its 20-month high, with the S&P 500 slightly lower, the Dow Jones down, and the Nasdaq composite slightly higher in morning trading.
- Asia Market Decline: Asian stock markets experienced sharper declines, driven by concerns about the health of China’s economy.
- KeyCorp Stock Drop: On Wall Street, KeyCorp’s stock fell notably after it reduced its income forecast, reflecting wider market uncertainties.
- Mixed Economic Reports: U.S. economic reports showed fewer job openings at the end of October than expected, while services business growth was higher than anticipated.
- U.S. Economic Slowdown Hopes: There’s a growing belief on Wall Street that the U.S. economy may be slowing down to a level that curbs inflation without triggering a recession.
- Federal Reserve’s Rate Hikes and Inflation: With inflation down from its peak, hopes are that the Federal Reserve might stop raising interest rates and could consider rate cuts to support the economy.
- Focus on Job Market Slowdown: Investors are closely monitoring the job market for signs of a slowdown through fewer open positions rather than layoffs, with job openings dropping to the lowest level since 2021.
- Services Industry Growth: U.S. services industries have seen growth, counterbalancing manufacturing weaknesses.
- Bond Market Yields: Treasury yields have been declining, offering relief to various markets, with the 10-year Treasury yield falling to 4.19%.
- Cryptocurrency Market Movement: Lower yields and potential new investment avenues have driven up cryptocurrency prices, including Bitcoin.
- Robinhood and Take-Two Interactive Stocks: Robinhood Markets saw an increase in its stock value due to a rise in crypto trading volumes, while Take-Two Interactive’s stock declined following news about the release of Grand Theft Auto VI.
- Global Markets Response to China: International markets reacted to Moody’s potential downgrade of China’s credit rating due to its slowing economy and real estate issues.
The Associated Press has the story:
Wall Street hangs near its best level in 20 months after mixed economic data
Newslooks- NEW YORK (AP)
Wall Street is hanging near its 20-month high Tuesday after a mixed set of reports kept questions alive about whether the U.S. economy can pull off a perfect landing that kills high inflation and avoids a recession.
The S&P 500 was 0.1% lower in morning trading and potentially heading for its first back-to-back loss since October. The Dow Jones Industrial Average was down 153 points, or 0.4%, as of 10:10 a.m. Eastern time, and the Nasdaq composite was 0.3% higher.
Stocks were down more sharply in Asia amid worries about the health of China’s economy, the world’s second largest. On Wall Street, KeyCorp slumped 3.8% for one of the larger losses after it cut its forecast for income from fees and other non-interest income.
U.S. stocks and Treasury yields wavered after reports showed that employers advertised far fewer job openings at the end of October than expected, while growth for services businesses accelerated more last month than expected.
Hope has been rising on Wall Street recently that the U.S. economy is slowing from its recently hot pace by just the right amount. Too much strength in the economy would give inflation more fuel, but too little would mean a recession.
With inflation down from its peak two summers ago, Wall Street’s hope is that the Federal Reserve may finally be done with its market-shaking hikes to interest rates and could soon turn to cutting rates. That could help the economy avoid a recession and give a boost to all kinds of investment prices.
Investors have been looking for a slowdown in the job market in particular. The hope is that it can cool more through employers cutting back on open positions than on employers laying off lots of workers. Tuesday’s report showed that employers advertised just 8.7 million jobs on the last day of October, down by 617,000 from a month earlier.
It’s the lowest level since 2021, and the “data support our view that rates are at a peak and the Fed’s next move will be a rate cut” in the spring of 2024, said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
A separate report said that activity for U.S. services industries expanded for the 41st time in the last 42 months, with growth reported by everything from agriculture to wholesale trade. Strength there has been offsetting weakness in manufacturing.
In the bond market, Treasury yields continued to sag further from the heights they reached during late October.
The yield on the 10-year Treasury fell to 4.19% from 4.26% late Monday, offering some more breathing space for stocks and other markets. It had been above 5% and at its highest level in more than a decade during October.
The yield on the two-year Treasury, which more closely tracks expectations for the Fed, went on a jagged run following the economic reports. It fell from 4.61% just before the reports’ release to 4.57% and back to 4.60%.
Lower yields have been one reason prices for cryptocurrencies have been rising recently. Excitement about a possible exchange-traded fund tied to bitcoin, which would open it to new kinds of investors, has also helped send it above $42,000 recently.
The surge of interest helped Robinhood Markets report a roughly 75% jump in trading volumes for crypto during November from a month earlier. It also said customers added about $1.4 billion in net deposits during the month, and its own stock rose 7.2%.
On the losing end was Take-Two Interactive, which slipped 1.9% after a trailer for its highly anticipated Grand Theft Auto VI video game said it’s coming in 2025. That was later than some analysts expected.
In markets abroad, stocks sank 1.9% in Hong Kong and 1.7% in Shanghai after the Moody’s credit-rating agency said it may downgrade China’s rating. Its economic growth is slowing and facing mounting troubles from its real-estate industry.
Stocks also fell in Japan and South Korea but were mixed across Europe.
