Bloomberg News reports that the stocks churned towards the end of August, which proved challenging. The traders have been parsing mixed economic data. Also, a key job reading is awaited to gauge the Federal Reserve Policy outlook. Yields from bonds dropped while the dollar rose.
What was the scenario in different sectors?
The S&P 500 completed recording on Thursday a small loss while simultaneously notching the first monthly drop since February. Following a consolidation after the year’s rally, traders were a little concerned because they felt that the Fed would continue to keep the interest rates higher for longer. This would prevent any flare-ups in the pressure of the prices. The Treasury 10-year yields extended the retreat after hitting levels last observed in 2007.
Dell Technologies Inc., in late trading, soared after it reported better than anticipated sales of data center hardware and personal computers. Broadcom Inc. projected an annoying forecast. It signaled a demand for electronic components that have continued to remain sluggish.
Lululemon Athletica Inc. raised its outlook, citing advances in its market stake. However, it also underscored how demand for the activewear brand continues to be robust.
The Fed’s preferred measure of underlying inflation witnessed a small back-to-back surge since the late 2020s. This has encouraged consumer spending. Markets took the report in stride, and the numbers illustrated divergence within the economy of the United States. Jeffrey Roach of LPL Financial confirmed this.
What is next for Wall Street?
Wall Street is now waiting for the labor market data of Friday. This data will offer insights on the next steps of the Federal Reserve. The report is a forecast to show that the employers have a boost in their payrolls in August by almost 170,000. On the other hand, the unemployment rate was at 3.5%, a historic low.
Federal Reserve Outlook
The Fed may need to be faster in cutting the rates than many market participants expect.
Bloomberg News reports that Raphael Bostic, the President of the Fed Bank of Atlanta, said that the policymakers must be cautious so that there is no overtightening of monetary policy and unwanted risk that might harm the labor market in the United States.
According to George Mateyo, Key Private Bank’s chief investment officer, given the consistent strength in the labor market and the fact that the economy’s growth is way above the trend, the Fed is viewing inflation as cooling.
