Wall Street Today | Stocks Retreat as Fed in No Rush to Cut
RECAP
Stocks Fall as Yields Rise
US stocks fell as yields rose after investors tempered expectations of interest rate cuts this year. Over the weekend, Federal Reserve Chairman Jerome Powell said policymakers are worried that inflation could rear its ugly head and reaccelerate if the central bank moves too soon in lowering borrowing costs.
The $S&P 500 Index(.SPX.US$ slipped 0.3%, while the tech-heavy $NASDAQ 100 Index(.NDX.US$ slid 0.2%. The $Dow Jones Industrial Average(.DJI.US$ declined 0.7%.
The $S&P 500 Index(.SPX.US$ slipped 0.3%, while the tech-heavy $NASDAQ 100 Index(.NDX.US$ slid 0.2%. The $Dow Jones Industrial Average(.DJI.US$ declined 0.7%.
$NVIDIA(NVDA.US$ shares extended their record-breaking rally after Goldman Sachs raised its price target for the stock to $800 from $625, implying there could be more gains in store for the chipmaker focused on artificial intelligence.
$Tesla(TSLA.US$ extended its slide, taking its market capitalization to $576.4 billion, below $Broadcom(AVGO.US$'s $581.6 billion. Shares of the electric vehicle maker fell after a report that Germany-based software company $SAP SE(SAP.US$, which has a fleet of 29,000 vehicles, will stop buying Tesla.
MACRO
No Rush to Cut Rates
Federal Reserve Bank of Chicago President Austan Goolsbee reinforced Powell's statements over the weekend that policymakers are in no rush to cut interest rates. During Powell's interview aired on "60 Minutes," he reiterated his comments during a press conference after the last Fed meeting that officials need to see consistent data showing that inflation is staying on its downward path to their 2% target before deciding on lowering borrowing costs.
Federal Reserve Bank of Chicago President Austan Goolsbee reinforced Powell's statements over the weekend that policymakers are in no rush to cut interest rates. During Powell's interview aired on "60 Minutes," he reiterated his comments during a press conference after the last Fed meeting that officials need to see consistent data showing that inflation is staying on its downward path to their 2% target before deciding on lowering borrowing costs.
Economic Resilience
The ISM Services Purchasing Managers' Index rose to 53.4 in January, a 13th straight month of expansion in economic activity in the services sector, data released Monday showed. The prices index in January was at 64, a 7.3-percentage point increase from December’s seasonally adjusted reading, according to the Institute for Supply Management report. The strong data adds to evidence of the US economy's resilience that could pose upward pressure on consumer prices.
SECTORS
Oil Supply Risks
$Crude Oil Futures(JUN4)(CLmain.US$ rebounded on Monday as traders priced in risks of potential disruptions to supply after a series of retaliatory strikes on Iran-backed militants by a US-led coalition over the weekend. The White House also said "more action" will be taken.
Gold futures fell on Monday as the dollar rose to the highest in nearly three months, and Fed Chair Powell's comments sent yields rising, curbing the appeal of the precious metal that doesn't pay investors any income.
COMPANIES
Estee Lauder Earnings Beat
$Estee Lauder(EL.US$ shares climbed, making the stock the biggest gainer on the S&P 500, after the cosmetics company reported better-than-expected second-quarter financial results and announced job cuts involving 3,000 positions. The company posted adjusted earnings per share of 88 cents for the quarter, beating the FactSet consensus of 54 cents, according to a MarketWatch report. Sales reached $4.28 billion, exceeding the average estimate of $4.19 billion.
ON Semiconductor's Positive Results
$ON Semiconductor(ON.US$shares jumped after the company reported that fourth quarter earnings declined less than analysts were expecting. The semiconductor company focused on automotive and industrial end-markets said adjusted earnings for the year ended Dec. 31 fell to $1.25 a share, beating the $1.20 estimate by analysts polled by FactSet. Earnings declined from $1.39 a share a year earlier.
Catalent's Takeover by Novo
$Catalent(CTLT.US$ shares climbed almost 10% after the company agreed to be acquired by Novo Holdings in an all-cash deal that values the biotech development and manufacturing firm at $16.5 billion.
DOJ Probes ADM
Shares of $Archer Daniels Midland(ADM.US$ fell, the third worst performance on the S&P 500, after Bloomberg and Reuters reported that the U.S. Justice Department is investigating the accounting practices at the agriculture company's nutrition business.
Source: Bloomberg, Dow Jones, CNBC, Reuters
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