Wall Street Indexes Wavered Near Record Highs, Global Markets Retained Upward Bias

Alexander Garcia
25 Sep, 2024
Miami

Stock market indexes on Wall Street traded around the flatline as investors reassessed the economic outlook and future rate path. 

The S&P 500 index and the Nasdaq Composite advanced a fraction, and the yields on Treasury notes edged slightly lower as investors debated labor market conditions and economic growth outlook. 

Benchmark indexes are set to close higher in September, and the Dow Jones Industrial Average and the S&P 500 index traded near record highs reached in the previous session. 

The Nasdaq Composite is down about 4% from its record high, as the two-month rally in artificial intelligence-linked stocks and mega-cap stocks came to an abrupt halt in August. 

Investors cheered the Fed's latest move to lower its policy rate by 50 basis points, surprising many economists, as the central bank attempted to engineer a so-called soft landing and avoid a recession. 

However, despite the Fed's move to lower its interest rate range, inflation is well-anchored in the economy, and service sector inflation is well above the Fed's target rate of 2%. 

Moreover, elevated housing inflation continues to keep core inflation near 3%. 

 

U.S. New Single-family House Sales Dropped In August 

The sale of single-family houses in August declined 4.7% from the previous month to a seasonally adjusted annual rate of 716,000, the U.S. Census Bureau and the Department of Housing and Urban Development reported Wednesday. 

The single-family house sale declined from July's revised rate of 751,000 but is 9.8% higher than the estimate of 652,00 in August of last year. 

The new home supply decreased by 1.3% from a year ago and rose by 6.8% from the previous month to 7.8 months of supply at the current sales rate. 

The median sales price of new houses sold in August 2024 was $420,600, and the average price was $492,700. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.1% to 5,726.83, the Nasdaq Composite rose 0.1% to 18,083.80, and the Russell 2000 index fell 0.5% to 2,214.05. 

The yield on 2-year Treasury notes edged lower to 3.54%, 10-year Treasury notes inched up to 3.76%, and 30-year Treasury bonds inched higher to 4.12%.

WTI crude oil increased $1.39 to $70.16 a barrel, and natural gas prices edged up 7 cents to $2.62 a thermal unit.

Gold fell by $0.05 to $2,658.20 an ounce, and silver decreased by $0.25 to $31.87.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.31.

 

U.S. Stock Movers

SAP SE declined 2.5% to $225.27 after the German software company's chief financial officer confirmed in an interview with CNBC that the company is being investigated by the U.S. Department of Justice for alleged price-fixing practices. 

KB Home declined 3.9% to $83.99 after the home builder reported weaker-than-expected results in its latest quarter. 

Progress Software surged 12% to $64.01 after the insurance company reported better-than-expected adjusted earnings and revenue in the fiscal third quarter. 

Bank of America Corp. declined 0.5% to $39.27, and Warren Buffett-controlled Berkshire Hathaway continued to reduce its holding in the bank. 

Berkshire Hathaway has now sold $9 billion of Bank of America's stock and lowered its holding to 10.5%. 

China-linked ADRs were in focus for the second day in a row after the People's Bank of China announced additional measures to support economic expansion. 

The central bank lowered its one-year loan prime rate, used for loans to financial institutions, by 30 basis points to 2.0%. 

JD.com decreased 3.5% to $32.70, Tencent Holdings dropped 1.6% to $52.60, and Alibaba Group declined 2.2% to $95.05. 

Artificial intelligence-linked stocks advanced amid growing speculation that the demand is running ahead of the supply. 

Nvidia increased 2.2% to $123.41, Qualcomm edged up 0.1% to $167.30, AMD added 0.8% to $159.56, and Micron Technology edged higher 0.9% to $94.84. 

 

European Markets Turned Down, Sweden Lowered Rates and Spain's Producer Price Deflation Decelerated 

European stock market indexes hovered near recent highs as investors reviewed the latest policy decisions from Sweden and China. 

Benchmark indexes in Paris, London, and Frankfurt traded around the flatline amid improving sentiment for the global economic outlook, but elevated tensions in the Middle East kept investors on edge. 

Crude oil traded near a two-week high after fears of a wider war in the Middle East rose after Israel bombed more territories controlled by Hezbollah in southern Lebanon. 

The latest Israel's bombing campaign has killed more than 500 people, including 35 children, and about 10,00 people have been displaced, and President Benjamin Netanyahu said that the current campaign is necessary to "restore the security balance."

On the economic front, Sweden's Riksbank lowered its benchmark rate by 25 basis points to 3.25% after the policy meeting today. 

The Riksbank lowered the rates after the policy meeting today and signaled additional rate cuts of at least 50 basis points over the next two policy meetings if the outlook for inflation and economic growth remains unchanged. 

The central bank lowered the rate by 25 basis points after the policy meeting in May and August. 

Spain's producer price deflation extended to the 18th month in a row to August, but prices fell at the slowest pace over the period. 

The annual producer price index decreased 1.3% in August following the revised 1.6% fall in the previous month.  

Vehicle and luxury goods makers were in focus for the second day in a row after the People's Bank of China lowered its 1-year loan prime rate by 30 basis points to 2.0% after holding it steady only days ago. 

The latest move follows a string of broad range of monetary policy decisions announced by the central bank on Tuesday to revive economic growth, increase investor confidence, and facilitate more property transactions. 

 

Europe Indexes and Yields

The DAX index decreased by 0.4% to 18,923.10; the CAC-40 index fell by 0.5% to 7,565.62; and the FTSE 100 index fell by 0.2% to 8,268.70. 

The yield on 10-year German bonds edged higher to 2.17%, French bonds inched lower to 2.92%, the UK gilts edged up to 3.97%, and Italian bonds decreased to 3.50%.

The euro edged lower to $1.11; the British pound inched higher to $1.33; and the U.S. dollar weakened to 84.88 Swiss cents.

Brent crude decreased $1.16 to $74.06 a barrel, and the Dutch TTF natural gas fell by €1.10 to €37.41 per MWh. 

 

Europe Stock Movers

Rightmove Plc dropped 1.3% to 674.0 pence, and the online property platform's board unanimously rejected the revised takeover offer from Australia's REA Group and said the offer "materially undervalues" the company. 

Valmet Oyj soared 10.3% to €27.87, and the Finnish pulp and paper production automation company won an order worth more than one billion euros in Brazil. 

UniCredit SpA jumped 1.9% to €37.99, and the Italian bank said it has initiated internalizing its life insurance business and terminated its partnership with Allianz S.p.A. and CNP Assurances SA. 

Orange SA decreased 0.1% to €10.69, and the French mobile telephone company said it has voluntarily decided to terminate its listing on the New York Stock Exchange. 

SAP SE declined 2.3% to €201.40 after the German software company's chef financial officer confirmed in an interview with CNBC that the company is investigated by the U.S. Justice Department for alleged price-fixing practices. 

Luxury stocks advanced for the second day in a row after China announced more monetary stimulus measures. 

LVMH increased 0.3% to €616.10, Hermes International SCA gained 1.3% to €2,038.0, and Kering SA added 0.8% to €230.75. 

 

Japan Stock Indexes Halt a 4-Day Rally, Yen Slides Ahead of BoJ Minutes and Tokyo Inflation Data 

Stock market indexes turned lower near the close of the trading after indexes spent most of the session in the positive territory and halted a 4-day winning streak. 

The Nikkei 225 stock average and the Topix index eased 0.2% and erased gains of as much as 0.3%.

The Japanese yen weakened to 143.44 against the dollar after Bank of Japan Governor Kazuo Ueda said on Tuesday that policymakers need time to assess economic developments. 

The comments were widely interpreted as the central bank is in no rush to hike rates, and investors shifted their attention to the release of minutes of policy meetings on Thursday and Tokyo-area inflation data on Friday. 

In other news in Asia, the People's Bank of China lowered its one-year loan prime rate by 30 basis points to 2.0%, just a day after announcing a list of stimulus measures to revive economic growth and lift market sentiment. 

Benchmark indexes in Shanghai and Hong Kong advanced as much as 2.5% before erasing most of the gains by the end of the session. 

Market indexes in India and Australia hovered near record highs, and in South Korea they closed down 1%. 

 

Japan Stock Movers 

The Nikkei 225 stock average decreased 0.2% to 37,870.26 and the broader Topix index fell 0.2% to 2,650.50. 

Financial stocks led the decliners in Tokyo amid a weakness in banks, insurance companies, and financial services providers. 

Mitsubishi UFJ Financial declined 2.5% to ¥1,444.50, Sumitomo Mitsui Financial dropped 2.8% to ¥8,882.0, MS&AD dropped 2.9% to ¥3,298.0, and Nomura Holdings declined 2.5% to ¥773.0. 

General wholesale trading companies, also known as Sogo Shosha, closed higher. 

Marubeni Corp added 1.1% to ¥2,366.0, Itochu fell 0.9% to ¥7,689.0, Mitsui & Company advanced 2.4% to ¥3,172.0, and Mitsubishi Corp added 0.9% to ¥2,987.50. 

Nippon Steel Corp. gained 0.8% to ¥3,236.0, and the steelmaker said it plans to pursue the acquisition of U.S. Steel despite the political pushback ahead of the upcoming presidential election in the U.S. 

 

China Indexes Extend Rally to Second Consecutive Day, PBoC Lowered 1-Year Loan Rates 

Stocks rallied for the second day in a row as investors cheered wide aggressive stimulus measures released by the Bank of China. 

The Hang Seng index rose as much as 2.5% and the CSI 300 index advanced 2.2% after the central bank announced additional steps on Wednesday. 

The People's Bank of China lowered its one-year medium-term lending rate to 2.0% from 2.3%, the rate used to load money to financial institutions. 

The latest move follows a raft of measures released by the central bank on Tuesday, ahead of the week of the National Holiday, to revive the faltering economic growth and moribund property market. 

On Tuesday, the central bank lowered its reserve requirement for commercial banks by 50 basis points, trimmed mortgage loan rates on existing loans to 50 basis points, and lowered the down payment requirement to 15% for the purchase of a second home. 

Moreover, the central bank also set up a fund of one trillion yuan to facilitate the purchase of stocks by institutional investors and revive investor confidence. 

The wide-ranging stimulus measures by the central bank were welcomed by investors, but these measures are likely to fall short without additional fiscal measures amid weak consumer demand. 

For now, investors lapped up stocks of real estate developers and high-risk tech stocks amid rising confidence that the central government is serious about reviving economic growth and the property market. 

 

China Movers 

The Hang Seng index increased 1.1% to 19,211.15, and the mainland-focused CSI 300 index advanced 1.5% to 3,400.47. 

Tech stocks and property developers extended their rally for the second day in a row. 

JD.com advanced 1.9% to HK $127.0, Alibaba Group rose 0.2% to HK $92.15, Baidu.com increased 1% to HK $89.80.

China Vanke added 1.9% to HK $4.77, China Resource Land decreased 1.5% to HK $22.05, and Longfor Group added 0.7% to $9.31. 

CATL increased 2.2% to ¥203.30, Kweichow Moutai advanced 2.1% to ¥1,401.90, and AIA Group added 2.2% to HK $60.95.