US Stocks End Lower Amid Fresh Economic Data
Market Update
US stocks ended lower on Wednesday as fresh economic data cast doubt on inflation, which is making significant progress toward the Federal Reserve’s 2 per cent target in October. The Dow Jones Industrial Average fell 138.25 points, or 0.31 per cent, to 44,722.06. The S&P 500 sank 22.89 points, or 0.38 per cent, to 5,998.74. The Nasdaq Composite Index shed 115.10 points, or 0.60 per cent, to 19,060.48.
Sector Performance
Seven of the 11 primary S&P 500 sectors ended in red, with technology and consumer discretionary leading the laggards by losing 1.19 per cent and 0.69 per cent, respectively. Meanwhile, real estate and health led the gainers by going up 0.67 per cent and 0.47 per cent, respectively.
Inflation and Interest Rates
The Fed’s preferred inflation gauge, the core personal consumption expenditures (PCE) index, showed a monthly increase of 0.3 per cent, consistent with September’s pace and Wall Street’s expectations. On an annual basis, core prices rose 2.8 per cent, slightly above September’s 2.7 per cent, suggesting that progress in curbing inflation has slowed. The latest inflation reading has sparked uncertainty regarding the Fed’s next steps. According to the CME FedWatch Tool, traders now see a 34 per cent chance that the Fed will hold rates steady at its December meeting, up from 24 per cent a month ago.
Economic Updates
In other economic updates, the second estimate of third-quarter gross domestic product confirmed the US economy grew at an annualised rate of 2.8 per cent, unchanged from the prior estimate. Meanwhile, the US weekly jobless claims continued to show strength in the labour market, with 213,000 claims filed in the week ending Nov 23, a slight decline from the previous week’s 215,000.
Job Market
"We are in a ‘low-hire, low-fire’ environment," Bank of America’s lead economist Aditya Bhave said Tuesday. "In the spring of 2022, there were two open jobs for every unemployed person. Now that figure is just a little more than one. In other words, there aren’t as many opportunities out there."
Mortgage Rates
Meanwhile, the average 30-year mortgage rate in the United States edged down to 6.81 per cent this week, a minor decline from 6.84 per cent the previous week, according to recent data. This marks the fourth consecutive week that the benchmark rate has hovered in the 6.8 per cent range, providing a degree of stability for prospective homebuyers and refinancers.
Corporate News
On the corporate front, Nvidia shares dropped 1.15 per cent on Wednesday, continuing a downward trend that has seen the artificial intelligence chip giant’s stock fall 9.36 per cent over the past five days. The selloff comes as investors weigh the company’s latest quarterly earnings report, which hinted at slower revenue growth despite strong profitability. Other tech companies also faced pressure, with Dell Technologies sinking 12.25 per cent after its earnings release disappointed investors.
Conclusion
The mixed bag of economic data and corporate news led to a decline in US stocks on Wednesday. While the labour market continues to show strength, the slowing pace of inflation and uncertainty around the Fed’s next steps weighed on investor sentiment. With the US markets pausing for Thanksgiving on Thursday, trading will resume on Friday in a shortened session.
FAQs
- What was the impact of the latest inflation data on the stock market?
- The latest inflation data sparked uncertainty around the Fed’s next steps, leading to a decline in US stocks.
- How did the labour market perform?
- The US weekly jobless claims continued to show strength in the labour market, with 213,000 claims filed in the week ending Nov 23, a slight decline from the previous week’s 215,000.
- What was the impact of corporate earnings on the stock market?
- Nvidia and Dell Technologies shares fell following their latest quarterly earnings reports, which hinted at slower revenue growth despite strong profitability.