Wall Street Traders React to Economic Data: Stocks Down, Bonds Up
Wall Street Reacts to Economic Data, Stocks Down and Bonds Up
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The latest round of economic data has left Wall Street traders on edge, with stocks sliding and bonds rising as signs of slowing momentum emerge.
A report released just 24 hours before the Federal Reserve’s preferred price gauge showed that the US economy grew at a softer pace, with spending and inflation both marked down. This slowdown could potentially push the Fed towards cutting interest rates later this year, raising concerns about weaker consumption and its impact on Corporate America.
“The economic data today are a double-edged sword,” said Chris Zaccarelli of Independent Advisor Alliance.
The S&P 500 took a hit, dropping to 5,235, led by losses in the tech sector. US officials also slowed the issuing of licenses to chipmakers, including Nvidia Corp. and Advanced Micro Devices Inc., for large-scale AI accelerator shipments to the Middle East. In addition, Dell Technologies Inc. saw its stock sink as investors were unimpressed by its revenue increase.
Meanwhile, Treasury two-year yields fell by five basis points to 4.92% and the dollar also experienced a decline.
Despite these setbacks, traders faced additional challenges with live pricing for the S&P 500 Index and Dow Jones Industrial Average for over an hour on Thursday morning in New York. However, individual stocks and exchange-traded funds continued to trade normally, helping traders navigate the disruption.
Looking ahead, Federal Bank of New York President John Williams expects inflation to continue falling in the second half of the year, but also notes that elevated borrowing costs are restraining the economy.
Zaccarelli believes that the economy’s expansion and corporate profits are crucial factors for the stock market in the medium to long term. While he predicts inflation to remain relatively stable this year, he expects the Fed to maintain its current stance on interest rates.
In light of these developments, the market will be closely watching Friday’s personal consumption expenditures price index release for further insights into the state of the economy.
Overall, the economy’s cooling trend, combined with strong corporate profits, has been favorable for stocks. Bank of America Corp.’s analysis shows that previous quarters of declining economic growth and rising corporate earnings have historically seen the S&P 500 advance.
The coming days will bring key events, including Japan’s unemployment and industrial production numbers, China’s PMI data, Eurozone CPI figures, and US consumer income data, among others.
As traders brace for further market fluctuations, the stock market’s performance in the face of economic challenges remains a key focus for investors.
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