U.S. and World Markets Hold Near Record Highs Ahead of Inflation Reports

Barry Adams
26 Feb, 2024
New York City

Stocks on Wall Street zig-zagged around the flatline, following a rise of more than 1% in the previous week of trading. 

The S&P 500 index and the Nasdaq Composite flatlined in trading, and investors took a wait-and-see approach ahead of the release of economic data later this week. 

This week, investors are looking forward to the release of the PCE Price Index, personal income and outlays, durable goods orders, the second estimate of fourth-quarter GDP data, and the goods trade balance.

Durable goods orders are scheduled to be released on Thursday, and investors are looking to get more clues about the demand for large-ticket items from businesses. 

On the corporate front, investors are looking ahead to the release of earnings from Dell, HP, TJX Companies, and Lowe’s. 

Investors have ignore the hawkish tone of Federal Reserve policymakers and benchmark indexes have advanced more than 30% since October. 

Moreover, investors are increasingly comfortable with higher interest rates because corporations have generally been successful in passing on higher operating costs to their customers and delivering earnings growth. 

Investors may not be sure about the timing of the interest rate cut, but most investors anticipate that the Federal Reserve will lower interest rates sometimes before the end of the first half. 

 

New Home Sales Edged Higher in January

Seasonally adjusted new home sales in January rose 1.5% to 661,000, driven by lower mortgage rates in the month, the U.S. Census Bureau reported Monday.

Seasonally adjusted new home sales advanced for the second month in a row, after dropping to an annual pace of 607,000 in November.  

The median sales price of new houses sold in January was $420,700, higher than $413,100 in December but lower than 432,100 a year ago. 

The average sales price was $534,300, higher than $493,400 from December and more than 495,600 a year ago.  

The seasonally‐adjusted estimate of new houses for sale at the end of January was 456,000, a supply of 8.3 months at the current sales rate. 

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.3% to 5,074.64, and the Nasdaq Composite declined 0.02% to 15,992.80. 

The yield on 2-year Treasury notes increased to 4.71%, 10-year Treasury notes inched down to 4.26%, and 30-year Treasury bonds edged down to 4.37%.

WTI crude oil decreased $0.07 to $76.41 a barrel, and natural gas prices increased 11 cents to $1.72 a thermal unit.

Gold decreased by $5.89 to $2,029.83 an ounce. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.82.

 

U.S. Stock Movers

Domino's Pizza increased 6.3% to $461.0, after the restaurant chain operator announced its $1 billion stock repurchase plan and increased its dividend by 25%. 

Berkshire Hathaway Class B increased 1.6% to $424.0 after the diversified conglomerate's fourth-quarter operating profit increased by 30% from a year ago. 

Amer Sports jumped 3% to $15.91 after several analysts made positive comments in their research notes, citing opportunities for revenue growth and margin expansion. 

 

European Markets Flatlined, Bond Yields Advanced

European markets rested in quiet trading in Monday's trading, and investors looked ahead to the release of economic data. 

This week, inflation and employment data are set to be released for the eurozone; GDP data in Italy; retail sales in Switzerland; and home price updates in the UK are also anticipated.

Germany, France, and Spain are set to release their inflation reports on Thursday. 

Moreover, investors are looking forward to comments from European Central Bank President Christine Lagarde. 

Market indexes hovered around their highs in France and Germany, and investors lowered rate-cut expectations in the near term.

The euro advanced after the European Central Bank's Yannis Stournaras ruled out the possibility of rate cuts in March.

In Asia, the Nikkei index closed at a new record high, but benchmark indexes in Shanghai and Hong Kong fell for the second day on the protracted property market downturn and persistent selling by foreign investors. 

Market indexes in Mumbai closed down, but indexes hovered near record highs as investors reviewed a mixed batch of earnings results released last week. 

 

Producer Prices In Spain Extended Decline to 11th Month 

Spain's producer prices declined 3.8% from a year ago in January, the National Statistics Institute, or INE, reported Monday. 

The measure of wholesale prices declined for the eleventh month in a row and extended the 6.3% decline in the previous month. 

The energy price decline eased to 12.6% from 20.6%, and intermediate goods prices fell 5.7% after easing 4.9% in the previous month, respectively. 

Producer prices, excluding energy prices, rose 0.2% in January, compared to a 0.3% decline in December.  

 

Europe Indexes and Yields

The DAX index increased by 0.02% to 17,423.23, the CAC-40 index fell 0.5% to 7,929.82, and the FTSE 100 index inched lower by 0.3% to 7,684.30.

In the previous week, the DAX increased 1.7%, the CAC-40 index advanced 2.6%, and the FTSE 100 index decreased 0.4%. 

The yield on 10-year German bonds edged up to 2.37%; French bonds inched higher to 2.83%; the UK gilts edged lower to 4.09%; and Italian bonds inched higher to 3.81%.

The euro edged higher to $1.084, the British pound inched higher to $1.264, and the U.S. dollar gained to 87.93 Swiss cents.

The natural gas price in Europe dropped 8% last week and approached the pre-Ukraine war crisis level of May 2021. 

Brent crude advanced $1.28 to $82.82 a barrel, and the Dutch TTF natural gas increased by €1.01 to €24.08 per MWh.

 

Europe Stock Movers

Pagero Group AB declined 0.2% to SEK 49.60 after Thomson Reuters Corp. announced the acquisition of the company for $800 million of 8.1 billion Swedish kronor. 

Ryanair Holdings gained as much as 1% before easing 0.9% to €20.42 on local reports that the Ireland-based discount airline may increase peak summer air fares by as much as 10%. 

Stellantis NV decreased 1.9% to €24.13, and the vehicle maker announced a deal with leasing and fleet management company Ayvens for 500,000 by 2026. 

Persimmon declined 3.7% to 1,359.75 pence, Barratt Developments fell 1.7% to 470.20 pence, and Taylor Wimpey dropped 3.7% to 140.53 pence after the antitrust regulator opened an investigation into the sector. 

 

Japan Pulls Ahead, China and India Indexes Closed Down

Across Asia, the Nikkei index in Tokyo edged higher, but the CSI 300 and Hang Seng indexes turned lower on the ongoing property market worries and the lack of government measures to stabilize financial markets. 

In Friday's trading, the U.S. markets gained and extended their weekly rise following another AI-powered advance in tech stocks. 

Meanwhile, European markets extended weekly gains following a string of positive earnings and stock buyback announcements from Standard Chartered Bank, HSBC Bank, Mercedes-Benz, Rolls Royce, and Repsol. 

 

Nikkei Trades at a New Record High Ahead of the Inflation Report

Benchmark indexes in Japan advanced after investors returned from a three-day holiday. 

The Nikkei index advanced 0.4% to 39,259.69 and traded at new highs, tracking the advance in New York in Friday's trading. 

Tech stocks led the gainers following a surge in Nvidia's earnings and an optimistic outlook. 

Investors also awaited the release of the inflation update on Tuesday, followed by the release of retail sales, industrial production, and unemployment data later in the week. 

Tech stocks led the gainers in Monday's trading, and SoftBank, Screen Holdings, Tokyo Electron, Advantest, and Renesas Electronics jumped between 0.5% and 1.5%. 

Financial stocks also participated in the market rally for the second day in a row, and Sumitomo Mitsui, Mitsubishi UFJ Financial, and Mizuho Financial gained between 0.6% and 1.2%. 

Sumco, Marubeni, Mitsubishi, Itochu, Chugai Pharmaceuticals, and Nintendo jumped between 2% and 6%. 

 

China Stocks Resume Downward Slide 

Market indexes in Shanghai and Hong Kong traded lower for the second day in a row after indexes advanced in the previous week, and investors awaited earnings from Baidu, NetEase, and Li Auto. 

The CSI 300 index decreased 05% to 3,470.86, and the Hang Seng index fell 0.5% to 16,630.30. 

Alibaba Group, Baidu, NetEase, JD.com, and Meituan decreased between 0.5% and 2.5%. 

Li Auto edged up 0.5% ahead of the release of quarterly earnings later today, and the larger rival BYD advanced 1.8%. 

Hong Kong Exchanges and Clearing decreased 1.3% ahead of its quarterly earnings later in the week. 

Investors have been selling China stocks for the third year in a row due to waning confidence in the authoritarian regime, the protracted property market slump, and foreign investors reallocating capital away from China to Japan and India. 

 

India Stocks Hover Near Record Highs 

Stocks struggled in early trading on Dalal Street as investors reassessed the interest rate path. 

The Reserve Bank of India's January policy meeting last week confirmed that members are not ready to lower rates in the near future, citing volatile and elevated food inflation, dashing hopes of a rate cut as early as May. 

Investors were also cautious after the Nifty index traded at a new high last week after leading corporations generally met or exceeded earnings expectations in the December quarter. 

The Sensex index decreased 137.45 points to 73,005.35, and the Nifty index fell 40.75 points to 22,171.95. 

On the Mumbai stock exchange, 187 stocks traded at their 52-week highs and 11 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds decreased to 7.04%, and the Indian rupee strengthened to ₹82.89 against the U.S. dollar.