U.S. and World Markets Trade Sideways as Indexes Hover Near Record Peaks

Barry Adams
28 Feb, 2024
New York City

Stocks, bonds, and commodities on Wall Street struggled to gain traction, and Treasury yields decreased ahead of the release of the personal consumption expenditure report on Thursday. 

The S&P 500 index and the Nasdaq Composite turned down as investors debated future rate paths and the health of the economy and reacted to the latest earnings results. 

Stock market indexes lacked direction and struggled to extend gains from the previous week after an AI-powered rally appeared to stall ahead of the release of more economic data on Friday. 

Investors have generally adjusted to higher interest rates, despite the rate uncertainty, because corporate earnings have been going higher as most companies have managed to pass higher costs on to consumers.

 

U.S. GDP Growth Revised Slightly Lower 

The U.S. economic growth was revised downward in the fourth quarter to 3.2% from the preliminary estimate of 3.3%, following the 4.9% annual pace of increase in the third quarter, the U.S. Bureau of Economic Analysis reported Wednesday. 

The lower reading in inventories negatively impacted the overall economic growth in the quarter. 

The revised reading on inventories subtracted 0.27 percentage points from the increase of 0.07 percentage points estimated in the first estimate. 

With the second estimate, downward revisions to private inventory investment and federal government spending were partly offset by upward revisions to state and local government spending, consumer spending, residential fixed investment, nonresidential fixed investment, and exports. 

Consumer spending was revised higher to 3% from 2.8%, government spending increased to 4.2% from 3.3%, and exports increased to 6.4% from 6.3% and imports to 2.7% from 1.9%. 

Both exports and imports were revised higher than expected. 

Residential investment advanced at 2.9%, and non-residential investment increased to 2.4% from 1.9%. 

For the full-year 2023, the GDP growth in the second estimate was unrevised at 2.5%, compared to 1.9% in 2022. 

 

U.S. indexes and Yields

The S&P 500 index decreased 0.1% to 5,070.91, and the Nasdaq Composite increased 0.4% to 15,961.52. 

The yield on 2-year Treasury notes decreased to 4.68%, 10-year Treasury notes inched down to 4.27%, and 30-year Treasury bonds edged down to 4.42%.

WTI crude oil decreased $0.27 to $78.60 a barrel, and natural gas prices increased 3 cents to $1.84 a thermal unit.

Gold increased by $3.75 to $2,033.39 an ounce, and silver fell 1 cent to $22.42. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.10.

 

U.S. Stock Movers

First Solar rose 6.4% to $154.10 after the solar panel maker reported a 30% increase in its net income in the fourth quarter and the company guided annual revenue that met analysts' expectations. 

eBay Inc. jumped 5.4% to $46.75 after the online marketplace operator reported fourth-quarter results that met investor expectations. 

The company also increased its dividend per share by 2 cents and announced a plan to buyback as much as $2 billion. 

Boston Beer dropped 10% to $333.48 after the craft brewery reported weaker-than-expected fourth-quarter results. 

The company reported revenue of $394 million and earnings per share of $1.49. 

Urban Outfitters plunged 9.5% to $42.69 after the apparel retailer reported weaker-than-expected fiscal fourth quarter results. 

 

European Markets Traded Mixed Amid Flood of Earnings Results

European markets traded mixed, and bond yields inched higher as investors reviewed the latest batch of earnings. 

Benchmark indexes in Paris and Frankfurt flatlined, and the euro edged higher against the U.S. dollar as market participants lowered expectations of a rate cut in the near future. 

The eurozone economic sentiment indicator unexpectedly declined in February, the European Commission reported Wednesday. 

The measure of confidence declined as businesses struggled under high inflation, rising interest rates, and weak external demand growth. 

The sentiment indicator declined to 95.4 in February from the revised 96.1 in January. 

Moreover, the consumer inflation expectations index increased 3.5 points to 15.5 in February, while the index for selling price expectations declined by 0.6 points to 3.8. 

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 17,580.90, the CAC-40 index decreased by 0.07% to 7,944.35, and the FTSE 100 index inched lower by 0.6% to 7,638.95.

The yield on 10-year German bonds edged up to 2.45%; French bonds inched higher to 2.93%; the UK gilts edged lower to 4.18%; and Italian bonds inched lower to 3.90%.

The euro edged higher to $1.080, the British pound inched higher to $1.263, and the U.S. dollar gained to 88.05 Swiss cents.

Brent crude decreased $0.80 to $82.94 a barrel, and the Dutch TTF natural gas increased by €0.65 to €25.05 per MWh.

 

Europe Stock Movers

ASM International declined 3.6% to €559.30 after the Dutch semiconductor equipment maker's current quarter revenue fell short of market expectations. 

Lanxess AG dropped 4.7% to €22.97 after the company said it plans to take a good impairment charge of €413 million linked to polymer additives, flavors, and fragrances business units. 

Just Eat Takeaway.com dropped 5.9% to €14.17, despite the food delivery company reporting a narrower loss in the last year. 

Reckitt Benckiser plunged 10% to 5,253.0 pence after the consumer products maker reported fourth-quarter comparable sales that fell short of market expectations. 

Aston Martin Lagonda Global Holdings declined 1.9% to 173.20 pence after the luxury sports car maker delayed its plans to launch an electric car by a year. 

Vodafone Group rose 1.6% to 69.42 pence after the company said it was in advanced talks to sell its Italian arm to Swisscom for cash.

Glanbia Plc increased 2.5% to €15.79 after the dietary supplement company reported a 20% increase in full-year after-tax profit. 

Halfords dropped by 31% to 138.20 pence after the vehicle repair and maintenance company trimmed its 2024 profit outlook. 

Taylor Wimpey declined 2.4% to 136.70 pence after the UK-based housebuilder reported a decline in pre-tax profit for fiscal year 2023. 

Capita PLC increased 3.6% to 20.74 pence after the outsourcing company, a European telecom service provider, enlarged its current contract. 

Casino Guichard Perrachon dropped 15% to €0.60 after the troubled retailer reported deeper losses in 2023. 

Worldline SA plunged 9.3% to €11.12 after the payment processing company reported a loss of €1.15 billion due to a goodwill impairment linked to its merchant services activities. 

Nicox SA dropped 1.1%, and the ophthalmology company appointed veteran biotech executive Gavin Spencer as the company's chief executive. 

 

Asian Markets Turned Lower

Stock markets in Japan, India, and China headed lower as investors awaited the release of U.S. inflation data and China's manufacturing report. 

Market sentiment was cautious in the region, and the Japanese yen flirted near a 4-decade low as investors debated the timing of the Bank of Japan's ultra-loose monetary policy. 

Hong Kong stocks were also in focus after the Hong Kong government announced a raft of measures to support the ailing property market, including eliminating decade-old curbs and relaxing mortgage rules. 

But foreign investors continued to sell stocks in Shanghai and Hong Kong due to a lack of earnings growth after a protracted property market decline, and the rising job insecurity kept consumer spending in check. 

 

Nikkei 225 in Tokyo Eased Ahead of U.S. Inflation Report

Stocks in Tokyo traded down, and benchmark indexes struggled to advance after investors turned cautious ahead of the release of U.S. inflation data later in the day. 

The Nikkei 225 average declined 0.1% to 39,208.52, and the Topix index dropped 0.1% to 2,675.77. 

Investors are hoping that the Bank of Japan will continue its ultra-loose monetary policy, but more and more market participants are looking for the central bank to end its zero interest rate policy as early as the second half of this year. 

The Japanese yen edged up to 150.64 against the year; the low was last seen in March 1990, and the interest rate differential between the U.S. and Japan persists over 500 basis points. 

In Wednesday's stock trading, tech stocks were among the leading decliners, and SoftBank, Nintendo, Advantest, and Screen Holdings fell between 0.5% and 4%. 

Electronics exporters Sony, Canon, Panasonic, and Mitsubishi Electric declined between 0.3% and 3%. 

 

China Stocks Look Down, Hong Kong Removes Decade-old Housing Transaction Restrictions 

Stocks in China traded with a familiar pessimism, despite the Hong Kong government's removal of all restrictions placed on property transactions over the last decade. 

The CSI 300 index increased 0.2% to 3,500.69, and the Hang Seng index decreased 0.1% to 16,773.28. 

Hong Kong's finance chief announced sweeping measures to revive the moribund property market, including the elimination of stamp duty for the purchase of second and additional homes by resident and non-resident buyers. 

The government also increased the available mortgage for properties worth less than HK$30 million to 70% from 60% and to 60% for properties worth more than that amount. 

Hong Kong property prices have been falling for nine months in a row, and prices are at the level last seen in 2016. 

Sun Hung Kai, China Vanke, China Resources Land, Henderson Land Development, Link REIT, and Hung Lung Properties gained between 2% and 5%. 

Tech stocks were also down amid market weakness, and Tencent, Alibaba Group, Baidu, and Meituan declined between 0.3% and 2.2%. 

 

India Stocks Traded Lower Amid Cautious Trading

Stocks in Mumbai opened higher, and investors reviewed cautious global market sentiment ahead of the release of economic data in China and the U.S. 

The Sensex and the Nifty indexes traded mixed, and investors remained cautious ahead of the release of the measure of inflation in the U.S. later in the day. 

The Sensex index decreased 1.1% to 72,304.88, and the Nifty index fell 1.1% to 21,951.15. 

On the Mumbai stock exchange, 260 stocks traded at their 52-week highs and 47 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.06%, and the Indian rupee strengthened to ₹82.88 against the U.S. dollar.