Wall Street Indexes Head Lower Ahead of Rate Decisions This Week

Alexander Garcia
16 Sep, 2024
Miami

Stocks traded around the flatline in Monday's trading as investors awaited the Fed's rate decisions and economic projections later in the week. 

The S&P 500 index increased 0.2% and the Nasdaq Composite decreased 0.8%, and investors are hoping that the rate-setting committee is ready to start its rate-cut cycle as early as this week. 

The S&P500 index and the Nasdaq Composite staged a sharp rebound last week after falling in the previous two weeks in a row, following two inflation reports that confirmed weakening inflationary forces. 

Investors are on edge, and the recent decline in inflation and comments from Fed Chair Powell and other officials have raised hopes of a rate cut of at least 25 basis points at the end of the policy meeting on Wednesday. 

Last week, investors raised hopes that the Fed may lower the rate by 50 basis points after consumer price inflation dropped to a three-year low and crude oil prices fell to this year's low. 

Moreover, the European Central Bank lowered its three key lending rates by 25 basis points following the easing of inflation below 2%. 

The Federal Reserve Bank is set to announce its rate decisions and economic projections at the end of its 2-day meeting on Wednesday. 

The Bank of England and the Norges Bank are expected to hold their rates steady on Thursday, and the Bank of Japan is likely to hold its rate range unrevised on Friday. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.1% to 5,619.35, the Nasdaq Composite fell 0.8% to 17,544.28, and the Russell 2000 index rose 0.2% to 2,186.91. 

The yield on 2-year Treasury notes edged lower to 3.58%, 10-year Treasury notes inched down to 3.66%, and 30-year Treasury bonds inched lower to 3.98%.

WTI crude oil increased $1.20 to $69.83 a barrel, and natural gas prices edged up 6 cents to $2.36 a thermal unit.

Gold rose by $4.81 to $2,583.29 an ounce, and silver increased by $0.05 to $30.76.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.70.

 

U.S. Stock Movers

Apple declined 3% to $215.79 amid worries that the company's new iPhone 16 may fall short of its sales target amid weak demand in China. 

Oil service and exploration company stocks advanced after the crude oil prices rebounded in Monday's trading for the second consecutive day in a row. 

Exxon Mobil jumped 0.9% to $112.15, Chevron jumped 0.6%, Transocean gained 1.3% to $4.26, and Hess Corp. added 1.2% to $129.08. 

 

 

Weak China Data Weigh On European Markets, Italy's Trade Surplus Jumps to 3-Year High 

European markets struggled in Monday's trading, and investors reviewed the latest economic updates in China. 

Market indexes rebounded between 1% and 2% in the previous week, tracking gains on Wall Street amid growing hopes of a 50 basis points rate cut by the Federal Reserve this week. 

Luxury goods and vehicle makers were under pressure after China's key economic data fell short of market expectations. 

China's retail sales and industrial output rose less-than-expected in August, and the jobless rate edged higher. 

Moreover, foreign direct investment plunged 31.5% to $81.8 billion in the first eight months to August. 

Moreover, new home prices across 70 largest cities plunged 5.7%, the fastest pace in nine years, indicating weak consumer demand. 

Closer to home, Italy's trade surplus widened to €6.7 billion in July from €6.1 billion in the period a year ago, the statistical agency, ISTAT, reported Monday. 

Exports rose 6.8% to €57.2 billion, driven by a 21.4% rise in pharmaceutical products, a 15.4% increase in food products and beverages, and a 15.3% rise in chemicals. 

Imports rose 6.3% to €50.4 billion, driven by a decline in apparel imports by 7.2% and natural gas by 6.5%, offsetting the increase in pharmaceuticals by 24.6%, food products and beverages by 16.2%, and chemicals by 15.9%. 

In the week ahead, investors are also awaiting monetary policy decisions from the Bank of England, the U.S. Federal Reserve, the Bank of Japan, and the Norges Bank. 

 

Europe Indexes and Yields

The DAX index decreased by 0.4% to 18,633.11; the CAC-40 index fell by 0.2% to 7,449.44; and the FTSE 100 index increased by 0.1% to 8,278.44. 

The yield on 10-year German bonds edged higher to 2.14%, French bonds inched lower to 2.83%, the UK gilts edged down to 3.77%, and Italian bonds decreased to 3.49%.

The euro edged up to $1.11; the British pound inched higher to $1.31; and the U.S. dollar weakened to 84.48 Swiss cents.

Brent crude increased $0.92 to $72.53 a barrel, and the Dutch TTF natural gas fell by €1.40 to €34.31 per MWh. 

 

Europe Stock Movers

Eni SpA increased 0.1% to €14.03 after a report suggested that the Italian oil company is seeking to sell more shares in its renewable energy arm, Plenitude. 

UniCredit SA advanced 0.4% to €37.07, and the Italian lender announced its plans to start repurchasing €1.7 billion of its own stock. 

Ispen SA gained 5.5% to €111.50, and the French drug maker said it has aborted its plans to commercialize its prostate cancer treatment after the late-stage trial failed to meet its main goals. 

Phoenix Group Holdings PLC decreased 3.4% to 557.0 pence after the British insurance company reported strong first-half results and halted its plans to sell its SunLife business. 

IFRS loss in the first half widened to £698 million from £245 million a year ago, reflecting higher global interest rates and adverse equities. 

IFRS adjusted operating profit increased 15% to £360 million from £313 million because of higher income in its pension and savings and retirement solutions divisions. 

In addition, the company's board approved an increase of 2.5% in cash dividends in the first half to 26.55 pence per share. 

Playtech PLC jumped 13.5% to 742.0 pence after the UK-based gambling technology company said its adjusted core profit is likely to be ahead of market expectations. 

Vossloh AG jumped 2.7% to €47.25, and the German rail technology company said it secured a €100 million contract from DB InfraGo AG, a unit of Deutsche Bahn AG. 

Mercedes Benz decreased 0.9% to €56.25, VW fell 1.6% to €90.92, and BMW dropped 0.8% to €72.72. 

Kering SA fell 0.8% to €226.85, LVMH fell 0.03% to €607.90, and Hermes International dropped 0.9% to €1,899.50. 

Rexel SA increased 8.7% to €24.97 after the electrical supplies distributor said it received and rejected an unsolicited acquisition offer from billionaire Brad Jacobs-led QXO. 

 

China's Faltering Economic Growth Data Highlight Struggling Consumer and Weakening Labor Market 

Stocks in Hong Kong struggled in Monday's trading as investors reviewed the latest flood of economic updates from the mainland. 

The Hang Seng index declined as much as 0.5% in Monday's trading after the key economic data fell short of market expectations, setting off alarms of rapidly faltering economic activities. 

China's retail sales in August rose 2.1%, industrial output advanced at a five-year low annual rate of 4.5%, fixed investment slowed at 3.4%, and foreign direct investment plunged 31.5% to $81.8 billion in the period between January and August, respectively. 

Retail sales slowed from 2.7% in the previous month, and fixed investment in the eight-month period to August slowed to 3.4% from the first seven months in the year, the National Bureau of Statistics reported over the weekend. 

Property investment dropped 10.2% in the eight-month period to August, matching the decline in the seven-month period ending in July. 

Industrial output growth slowed to 4.5% from a 5.1% increase in July, as domestic demand growth continues to wane. 

The urban jobless growth rate edged higher to 5.3% in August from 5.2% in July, but the jobless data are widely suspected to understate by a wide margin the weakness in the labor market. 

China's weak growth data confirmed the uneven economic recovery and the government's flexibility to stimulate the economy because of sky-high debt levels at the federal and local government levels. 

Moreover, new home prices across 70 cities declined 5.7% in August, faster than 5.3% in July, according to the latest data released by the National Bureau of Statistics. 

New home prices fell at the fastest pace since May 2015 as the federal government's piecemeal approach to reviving weak property markets failed. 

Prices in Tier-1 cities, which generally act as a barometer of a nation's health, declined 0.3% from the previous month, reversing a trend of rising prices for years. 

Moreover, prices declined 0.7% in the Tier-2 and Tier-3 cities, amid a lack of demand and a string of failed and unfinished residential investment projects. 

Existing home sales did not fare any better, and prices plunged 0.9% across the top 70 cities, the statistics bureau reported over the weekend.

China's households are increasingly parking their savings in banks amid weak consumer confidence and a rapidly weakening labor market outlook. 

China's retail bank deposits increased by 9.65 trillion yuan in the eight months to August, with 710 billion yuan rising in August alone, the People's Bank of China reported on Friday. 

 

China Stock Movers 

The Hang Seng index decreased 0.04% to 17,362.17, and financial markets on the mainland were closed for the celebration of the Mid-Autumn festival. 

Residential property developers extended recent losses after the release of new home price data over the weekend. 

China Resources Land decreased 2.7% to HK $19.04, China Vanke decreased 2.5% to HK $3.83, Longfor Group Holdings dropped 2.6% to HK $7.81, but Sun Hung Kai Properties rose 1.1% to HK $78.70. 

Tech stocks lacked direction and headed lower in Monday's trading. 

Alibaba Group fell 1.03% to HK $81.90, Tencent Holdings gained 0.7% to HK $377.60, and Baidu added 0.7% to HK $82.65.