Wall Street Slips as Economic Data Tempers Market Rally

Wall Street/ S&P 500/ Nasdaq Composite/ Dow Jones/ jobless claims/ wholesale inflation/ Federal Reserve rate cuts/ NEW YORK/ Newslooks/ J. Mansour/ Morning Edition/ Wall Street’s major indexes dipped Thursday, with the S&P 500 falling 0.2% as investors digested economic reports on inflation and jobless claims. The Nasdaq slid 0.4% from a record high, while the Dow edged up 0.1%. Concerns about inflation and a softening labor market tempered optimism about the Federal Reserve’s anticipated rate cut next week.

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Wall Street Market Update Quick Looks

• S&P 500: Down 0.2%, potentially marking three losses in four days.
• Nasdaq Composite: Fell 0.4% from its record high on Wednesday.
• Dow Jones: Gained 23 points (0.1%) in early trading.
• Economic Data: Jobless claims and wholesale inflation reports suggest mixed signals.
• Global Markets: Asian indexes rose, while Europe held steady after central bank rate cuts.

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Deep Look

Wall Street Movement

U.S. stock indexes showed mixed performance Thursday morning following reports highlighting lingering inflationary pressures and softening labor market data.

The S&P 500 slipped 0.2%, continuing a recent trend of slight declines amid a broader rally this year. The Nasdaq Composite dropped 0.4%, retreating from its record high achieved on Wednesday. Meanwhile, the Dow Jones Industrial Average edged higher, gaining 0.1%, or 23 points.

Economic Reports and Their Implications

Two economic updates released Thursday morning influenced investor sentiment:

1. Jobless Claims: Applications for unemployment benefits rose more than expected last week, signaling potential softening in the labor market.
2. Wholesale Inflation: The producer price index rose faster than economists predicted, driven in part by higher food prices such as eggs.

While neither report signaled immediate economic trouble, they hinted at challenges for the Federal Reserve as it aims to balance economic support with inflation control.

Chris Larkin of E-Trade at Morgan Stanley noted, “The Fed is primed to be sensitive to any signs of a softening jobs picture.”

Federal Reserve Rate Cuts Expected

Despite the data, traders remain confident the Federal Reserve will implement its third consecutive rate cut next week, following reductions in September and November. This aligns with moves by other central banks:

• The European Central Bank reduced rates by a quarter point.
• The Swiss National Bank implemented a half-point rate cut, citing uncertainty around President-elect Donald Trump’s policies and European politics.

Lower interest rates aim to support economic activity and buoy investment prices, though they may reignite inflationary pressures.

Market Movers

• Adobe: Dropped 11.4% despite reporting better-than-expected quarterly profits. Forecasts for fiscal-year profit and revenue fell slightly short of analyst expectations.
• Kroger: Rose 2.9% after announcing a $7.5 billion stock repurchase program following its abandoned merger with Albertsons.

Global Market Trends

• Europe: Stock indexes held steady after the European Central Bank’s rate cut.
• Asia: Markets posted gains, with Hong Kong up 1.2% and Shanghai rising 0.8%. South Korea’s Kospi surged 1.6% amid recovery from recent political upheaval.

Bond Market Activity

• 10-Year Treasury Yield: Rose to 4.29%, up from 4.27% on Wednesday.
• 2-Year Treasury Yield: Slightly decreased to 4.15% from 4.16%, reflecting expectations of a Fed rate cut.

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