S&P 500 and Nasdaq Rebound 1%, European Markets Trade Near Record Levels

Barry Adams
04 Apr, 2024
New York City

Stocks on Wall Street rebounded after indexes struggled for three days amid interest rate uncertainty and rising commodity prices. 

Copper futures traded at a 14-month high, gold hovered near a record high, crude oil prices rose to a 3-month high, and steel prices dropped to a 4-year low. 

The S&P 500 index gained 0.4% and the Nasdaq Composite advanced 0.9% as the yield on the 10-year Treasury note hovered near a four-month high. 

Investors dialed down rate-cut expectations after Federal Reserve Chair Jerome Powell said on Wednesday that before policymakers begin to cut rates, more evidence is needed that inflation is moving towards the target rate of 2%. 

Federal Reserve Bank of Atlanta president Raphael Bostic said in an interview with CNBC that only one rate cut is likely in 2024. 

Investors have been digesting a flood of mixed economic news in the last two weeks, and the PCE price index showed it stayed well above the Fed's target rate in February. 

Moreover, manufactured goods orders and construction spending also increased sharply from a year ago in February. 

 

Initial Weekly Jobless Claims Rose to a 2-month High

U.S. initial jobless claims in the week ending March 30 rose by 9,000 to 221,000, according to the latest update released by the Department of Labor. 

The initial claims rose to a two-month high, and continuing claims, which lag by a week, inched slightly lower to 1.79 million. 

 

U.S. Trade Deficit Expanded to a 10-month High

The U.S. Commerce Department reported that the trade deficit rose by $1.3 billion from the previous month to $68.9 billion in February. 

Exports of goods and services in February rose 2.3% to $263.0 billion, and imports advanced 2.2% to $331.9 billion. 

The goods deficit decreased by $0.3 billion to $91.4 billion, and the services surplus fell by $1.6 billion to $22.5 billion. 

 

U.S. Indexes and Yields

The S&P 500 index increased 0.8% to 5,252.96, and the Nasdaq Composite rose 1.1% to 16,463.0. 

The yield on 2-year Treasury notes edged lower to 4.70%, 10-year Treasury notes inched up to 4.39%, and 30-year Treasury bonds edged up to 4.53%.

WTI crude oil increased $0.71 to $84.87 a barrel, and natural gas prices decreased 7 cents to $1.77 a thermal unit.

Gold decreased by $8.78 to $2,288.65 an ounce, and silver fell 7 cents to $27.09. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.05.

 

U.S. Stock Movers

Levi Strauss & Co. soared 10.5% to $22.05 after the denim apparel maker reported quarterly results that met market expectations. 

Revenue in the fiscal first quarter ending on February 25 declined 7.8% to $1.56 billion, net income swung a loss of $10.6 million from a profit of $114.7 million, and diluted earnings per share were a loss of 3 cents compared to 29 cents a year ago. 

The company declared a cash dividend of 12 cents per share payable on May 23 to shareholders on record on May 9. 

Intuitive Machines jumped 2% to $6.16 after the company won a U.S. space agency's $30 million contract to build a lunar terrain vehicle. 

ConAgra Brands jumped 4.9% to $30.50 after the company reported quarterly results that met market expectations. 

Revenue in the fiscal third quarter declined 1.7% to $3.03 billion, net income declined 9.8% to $308.7 million from $341.7 million, and diluted earnings per share dropped to 64 cents from 71 cents a year ago. 

Volvo SE gained 0.6% to SEK 288.50 after the vehicle maker reported a significant increase in sales in March and in the first quarter. 

The Sweden-based vehicle maker, owned by China-based Geely, said the company sold 78,970 passenger cars in March, an increase of 25% from a year ago. 

First-quarter vehicle sales soared 12% from a year ago to 182,687. 

Electric vehicle sales in Europe advanced 34% in March and rose 22% in the first quarter; however, electric vehicle sales in China plunged 34%. 

 

European Policymakers Struggle to Lower Inflation to 2% 

European stock market indexes rebounded as investors reacted to a fresh batch of economic news and corporate updates. 

Benchmark indexes in Paris, Frankfurt, and London edged higher into record territory as investors shifted their attention from interest rate uncertainty to the upcoming earnings season. 

The latest minutes of the rate-setting committee meeting showed policymakers saw a stronger case for lowering the interest rate as inflationary forces continue to ebb. 

However, committee members noted the challenges of slowing inflation further after service inflation stayed at elevated levels for the last four months in a row. 

"Services inflation, with the latest figure at 3.9%, had barely moved from the 4% recorded for November, which lent further support to the picture of “last mile” persistence in that component of inflation. 

In January, around 90% of the service consumption basket had still been growing at an annual rate above 2%. The turnaround in services inflation had started late, only in July 2023, and services inflation had lost a mere 1.7 percentage points of the 4 percentage point increase observed since the start of the pandemic," noted the minutes of the meeting released by the European Central Bank on Thursday. 

Given the large and rising weight of services in the euro area value added, this stickiness had significantly restrained the overall disinflation process.

Monetary policy transmission to services Inflation might be weaker and slower than in manufacturing, as services tend to be less capital-intensive and hence less exposed to changes in external financing conditions.

 

Eurozone Private Sector Activities Expanded for the First Time In Ten Months

The eurozone private sector's business activity expanded for the first time in ten months, according to the latest survey released by S&P Global on Thursday. 

The HCOB Eurozone Composite PMI was revised upward to 50.3 in March from the initial estimate of 49.9 and higher than 49.2 in February. 

The overall increase in business activity was modest because the weakness in manufacturing output continued to overshadow service sector activities. 

Manufacturing output contracted at 46.1 compared to 46.5, and the service sector improved to 51.5 from 50.2 in February, respectively. 

The index tracking expectation for future business activities reached a high not seen since February 2022, indicating a positive outlook in the coming months. 

 

Producer Prices Extended Annual Decline to 10th Month

On the economic front, producer prices in the eurozone declined 8.3% in February after falling at an annual rate of 8.0% in January, Eurostat reported Thursday. 

Producer prices, a measure of wholesale inflation, eased by 1.0% in February from the previous month after easing 0.9% in the previous month. 

Producer prices declined on a monthly basis for the fourth month in a row and eased on an annual basis for the tenth month in a row. 

The monthly decline in producer prices was the largest in February since May 2023, after energy prices fell at a faster pace of 3.5% compared to 3.0% in January and prices for intermediate goods held steady for the second consecutive month. 

Producer prices, excluding volatile energy prices, inched higher by 0.1% following a 0.3% increase in January. 

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 18,402.43, the CAC-40 index fell by 0.02% to 8,151.55, and the FTSE 100 index inched higher by 0.5% to 7,975.89.

The yield on 10-year German bonds edged down to 2.38%; French bonds inched lower to 2.88%; the UK gilts edged lower to 4.07%; and Italian bonds inched higher to 3.76%.

The euro edged higher to $1.085, the British pound inched higher to $1.265, and the U.S. dollar edged higher to 90.61 Swiss cents.

Brent crude increased $0.54 to $89.01. a barrel, and the Dutch TTF natural gas rose by €0.26 to €26.23 per MWh.

 

Europe Stock Movers

DS Smith increased 1.7% to 409.60 pence after the company confirmed it is still in merger talks with the U.K.-listed and Austria-based Mondi Plc. 

DS Smith is also evaluating a competitive bid from the U.S.-based International Paper, which valued the company at 415 pence per share of £5.72 billion, higher than the £5.1 billion offer from Mondi. 

The packaging industry is going through a wave of consolidation after demand soared for packaging materials following the boom in pandemic-driven e-commerce. 

Basilea Pharmaceutica AG jumped 7.2% to CHF 41.45 after the Switzerland-based pharmaceutical company received approval from the U.S. drug regulator for Zevtera, an antibiotic drug for the treatment of multiple infections. 

Future Plc jumped 12.1% to 671.50 pence after the diversified specialist media company reported revenue growth in the second quarter. 

The company reiterated its full-year fiscal 2024 outlook, citing continued improvement in its U.S. business. 

Entain PLC rose 3.5% to 785.80 pence after sports betting and online gambling company Chairman of the Board Barry Gibson stepped down from the management position in September after spending four years in the office.