The S&P 500 is close to flat as investors weigh the chances of a less aggressive rate hike

  • The gain of shares of Tech
  • Macy’s, Lululemon fall on holiday alert
  • Indices: Dow by 0.3%, S&P 500 by 0.1%, Nasdaq by 0.6%

NEW YORK, Jan 9 (Reuters) – The S&P 500 (.SPX) erased early gains on Monday to close almost flat as expectations that the Federal Reserve will become less aggressive on rate hikes offset lingering inflation concerns .

The Dow finished lower and the Nasdaq Composite (.IKSIC) ended well above the day’s highs.

Investors are awaiting comments on Tuesday from Fed Chairman Jerome Powell, who some strategists expect may say more time is needed to show inflation is under control.

Money market bets were showing a 77% chance of a 25 basis point hike at the Fed’s February policy meeting.

Thursday’s consumer price report could be key to rate expectations, said Quincy Crosby, chief global strategist, LPL Financial in Charlotte, North Carolina. “This week’s CPI report will be essential for fine-tuning the Fed funds futures market.”

Investors also may have sold some stocks after recent strong market gains, said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “You see some profit-taking ahead of the CPI number due out this week.”

The technology sector (.SPLRCT) gained as Treasury yields fell. Consumer discretionary shares ( .SPLRCD ) also rose, with Inc ( AMZN.O ) up 1.5% after Jefferies said it eased cost pressure for the e-commerce giant in the second half of the year.

Also, S&P 500 companies are about to begin their fourth-quarter earnings period, with results from top US banks expected later this week.

Traders work on the stock market at the New York Stock Exchange (NISE) in New York, U.S., January 5, 2023. REUTERS/Andrew Kelly

The Dow Jones Industrial Average (.DJI) fell 112.96 points, or 0.34%, to 33,517.65, the S&P 500 (.SPKS) lost 2.99 points, or 0.08%, to 3,892.09 , and the Nasdaq Composite (.IKS.36) added 2.99 points, or 0.08%, to 3,892.09 points (.IKS.36). 0.63%, to 10,635.65.

Shares of Broadcom Inc ( AVGO.O ) fell in late trading, ending down 2% after Bloomberg reported, citing people familiar with the matter, that Apple Inc ( AAPL.O ) plans to divest from Broadcom chip in 2025 and uses in- instead the design of the house.

Friday’s jobs report, which showed a moderation in wage gains, raised hopes that the Fed may become less aggressive in its bid to raise rates to reduce inflation.

Shares of Tesla Inc ( TSLA.O ) rose 5.9% after the electric vehicle maker indicated longer wait times for some versions of the Model I in China, signaling that recent price cuts could boost demand.

Macy’s Inc ( MN ) fell 7.7% and Lululemon Athletica Inc ( LULU.O ) fell 9.3% after both retailers posted disappointing forecasts for the holiday quarter.

Volume on US exchanges was 11.35 billion shares, compared to the 10.90 billion average for the full session over the last 20 trading days.

Advanced issues outnumbered decliners on the NISE by a ratio of 1.85 to 1; on the Nasdaq, a ratio of 1.48 to 1 favored the advancers.

The S&P 500 posted 13 new 52-week highs and two new lows; The Nasdaq Composite recorded 129 new highs and 32 new lows.

Additional reporting by Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Richard Chang

Our Standards: Thomson Reuters Trust Principles.

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