Investing.com — The Dow snapped a four-day losing streak Tuesday, as rising energy stocks helped the broader market overcome an ongoing march higher in Treasury yields following the Bank of Japan’s unexpected hawkish pivot.

The Dow Jones Industrial Average gained 0.3%, or 92 points, the Nasdaq Composite was up 0.01%, and the  S&P 500 rose 0.1%.  

The Bank of Japan rattled investors overnight after announcing that it would allow 10-year Japanese government yields to rise as much as 50 basis points, or 0.5%. That was up from the previous 25 basis point cap, and signals the BoJ’s “first step toward tighter monetary policy by widening the target range for bond yield,” Commerzbank said in a note.

The surge in Japanese government bond yields pushed up yields on global bonds including Treasuries, keeping gains in rate-sensitive sectors like tech in check.

Rising energy stocks, however, helped steady the broader market higher as oil prices added to gains from a day earlier supported by a weaker dollar.

Halliburton Company (NYSE:HAL), Schlumberger NV (NYSE:SLB) and ConocoPhillips (NYSE:COP) were among the biggest sector gainers.

On the earnings front, meanwhile, General Mills (NYSE:GIS) lifted its guidance and delivered better-than-expected second-quarter results. Its stock, however, slipped more than 5%.

Consumer stocks were the biggest drag on the broader market with Tesla (NASDAQ:TSLA) leading to the downside after Evercore ISI cut its price target on EV maker to $200 from $300 on concerns of further downside as the stock failed to hold above a key level of support.

Retailers including VF Corporation (NYSE:VFC) and Ralph Lauren (NYSE:RL) were also under pressure as investors looked ahead to quarterly results from sportswear giant Nike (NYSE:NKE) – due after the closing bell – that could offer further clues on the strength of the consumer.  

Nike reported fiscal second-quarter results that topped estimates on both the top and bottom lines, sending its shares more than 6% higher in afterhours in trading.

In economic news, fresh housing data continued to show the pain from red-hot mortgage rates following the fast pace of Federal Reserve rate hikes this year.

Housing starts topped forecasts in November, but permits, a gauge of activity for future projects, fell to an 18-month low, fueling worries about further downside activity.

“With the November drop, permits are now below the level of starts, which is very rare and points to further downside for construction activity,” Jefferies said in a note.

By Ambar Warrick

Investing.com– Most Asian currencies moved little on Monday as fears of a potential recession and rising COVID-19 cases in China weighed on sentiment, while the Japanese yen gained on bets that the Bank of Japan (BoJ) could eventually tighten policy amid rising inflationary pressures.

The yen rose 0.4% to 136.18 against the dollar after a report suggested that the Japanese government plans to revise the BoJ’s inflation target to make it more flexible. Such a move heralds a potential policy shift in the central bank’s ultra-accommodative stance, which has seen Japanese interest rates stick to near-zero levels for nearly a decade.

This accommodative stance weighed heavily on the yen as interest rates in the rest of the world rose, which in turn fed into Japanese inflation, which is currently at a 40-year high. The Japanese economy was battered by rising inflation this year, while the yen is among the worst-performing Asian currencies in 2022.

Focus is now on the BoJ’s final meeting for the year on Tuesday. While the bank is widely expected to hold interest rates at ultra-low levels, any commentary on a possible shift in tone will be closely watched.

The South Korean won was the best performing Asian currency on Monday, surging 0.8% to 1,300.31 a dollar after Finance Minister Choo Kyung-ho said that the country’s economic slump will bottom out by mid-2023. While the east Asian country was hit hard by weakness in major trading partner China, the finance minister’s comments suggest that a 2023 recovery may be on the cards.

The won was also one of the best-performing Asian currencies in recent months, as it bounced back from a 13-year low hit in October.

Most other Asian currencies moved little against the dollar, with the greenback remaining steady after the Federal Reserve signaled last week that it intends to keep hiking interest rates in the near-term.

The dollar index fell 0.1%, coming under pressure from strength in the euro and the pound after hawkish signals from their respective central banks.

But the prospect of rising interest rates in the West weighed heavily on sentiment, as investors feared a potential recession due to inflation staying elevated.

Uncertainty over an economic reopening in China also weighed. While the country recently scaled back its strict zero-COVID policy, it is also coping with a sharp rise in infections, which markets fear could delay a full reopening.

The Chinese yuan fell 0.2% as recent economic data highlighted growing cracks in the country’s economy.

TOKYO : The safe-haven dollar held just below the month’s high against the yen on Friday and maintained overnight gains versus other peers amid growing worries that continued monetary tightening at the world’s biggest central banks could trigger a recession.

European Central Bank President Christine Lagarde said after the policy board raised interest rates again overnight that “this is not enough,” and that the bank must “continue the battle against inflation at a steady pace.”

A day earlier, the U.S. Federal Reserve also tightened policy, with Chair Jerome Powell adding policymakers expected rates to rise higher and stay elevated for longer.

“It has been a big night in markets, with the modestly ‘risk-off’ reaction to the Fed on Wednesday from what was seen as a slightly more hawkish than expected set of outcomes, greatly exacerbated by the messaging out of the ECB’s meeting,” Ray Attrill, head of foreign-exchange strategy at National Australia Bank, wrote in a note.

The dollar index, which gauges the currency against the euro, yen and four other peers, edged 0.06 per cent lower to 104.45 in early Asia trading, but following a 0.85 per cent surge overnight, its biggest since late September.

It has been a volatile week for the greenback though, which has it ultimately on track for a 0.47 per cent decline.

The dollar climbed as high as 138.18 yen on Thursday for the first time since Nov. 30, ending that day with a 1.68 per cent gain. On Friday, it eased back 0.18 per cent to 137.51 yen.

The euro added 0.08 per cent to $1.0637, rebounding slightly from Thursday’s 0.49 per cent retreat.

Sterling, which is also part of the dollar index, gained 0.11 per cent to $1.21945, following a 1.99 per cent tumble the previous day.

The Bank of England raised its key interest rate on Thursday as well and indicated more hikes were likely. However, investors bet that the BoE might be getting close to the end of its increases in borrowing costs.

The risk-sensitive antipodean currencies stabilised on Friday following big drops the previous day.

The Australian dollar was 0.13 per cent higher at $0.67085, recovering after a 2.38 per cent slide overnight that saw it touch $0.6677 for the first time since Dec. 7.The New Zealand dollar bounced 0.19 per cent to $0.6353 following a 1.84 per cent tumble on Thursday, when it dipped to $0.6321, also a first since Dec. 7.

WASHINGTON: The Federal Reserve will deliver more interest rate hikes next year even as the economy slips towards a possible recession, Fed Chair Jerome Powell said on Wednesday, arguing that a higher cost would be paid if the US central bank does not get a firmer grip on inflation.

Recent signs of slowing inflation have not brought any confidence yet that the fight has been won, Powell told reporters after the Fed’s policy-setting committee raised its benchmark overnight interest rate by half a percentage point and projected it would continue rising to above 5% in 2023, a level not seen since a steep economic downturn in 2007.

Those rises in borrowing costs would come despite an economy that Fed officials projected will operate at near stall speed through next year, with an annual growth rate of 0.5% and an unemployment rate nearly a full percentage point higher by the end of 2023, well beyond the increase historically associated with a recession.

“We don’t talk about this kind of recession, that kind of a recession. We just make these forecasts,” Powell said in a news conference. “I wish there were a completely painless way to restore price stability. There isn’t, and this is the best we can do.”

He described the slow rate of economic growth penciled in by Fed officials next year as still “modest.”

“I don’t think it would qualify as a recession … That’s positive growth,” the Fed chief said, even though “it is not going to feel like a boom.”

But other aspects of the Fed’s projections, notably a rise in the unemployment rate to 4.6% from the current 3.7%, are consistent with a downturn settling in as the central bank keeps its target policy rate at a “restrictive level” for at least the next two years.

The rate increase on Wednesday, which was approved unanimously by Fed policymakers and widely expected by financial markets, lifted the targeted policy rate to the 4.25%-4.50% range, with officials expecting it to rise to a level between 5.00% and 5.25% next year.

If anything, the bias is higher: seven of 19 policymakers projected even higher rates will be needed, and U.S. central bankers are unanimous that the risks are tilted towards higher-than-expected inflation rather than a surprise in the other direction.

Still, Powell said, repeating the hard-line on enforcing the Fed’s 2% inflation target that he has developed through the year, “the largest amount of pain, the worst pain, would come from a failure to raise rates high enough and from us allowing inflation to become entrenched.”

“The new economic projections imply an even higher pain threshold than before” for a Fed willing to tolerate the equivalent of about 1.6 million lost jobs, wrote Aneta Markowska, chief financial economist at Jefferies. “This suggests hawks still outnumber the doves by a significant margin.”

Even with recent improvements, the Fed’s preferred measure of inflation remains around triple the central bank’s target, and policymakers project it will take at least three years to fall all the way back.

Only two of 19 Fed officials see the benchmark overnight interest rate staying below 5% next year, a sign of a still broad consensus to lean against inflation.

The message from the Fed on Wednesday also leaned against market expectations that recent data showing slowing inflation might push the central bank from its hawkish path and move policymakers toward cutting rates before the end of next year.

“Getting markets to hear that is key to fixing financial conditions” that have loosened in recent months as inflation data has improved, a move counter-productive to the Fed’s inflation-fighting strategy, said Carl Riccadonna, chief US economist at BNP Paribas.

‘ESTRICTIVE ENOUGH’

The new statement was released after a policy meeting at which officials scaled back from the three-quarters-of-a-percentage-point rate increases delivered at the last four gatherings.

US stocks closed lower on Wednesday. In the US Treasury market, which plays a key role in the transmission of Fed policy decisions into the real economy, yields were little changed to slightly lower. The dollar dipped against a basket of currencies.

“Taken together, today’s statement and economic projections tell a simple, but persuasive story: this Fed isn’t prepared to ‘pivot’ in any meaningful way until it sees sustained and conclusive evidence of a reversal in inflationary pressures,” said Karl Schamotta, chief market strategist at Corpay.

Powell said the speed of coming rate rises is less critical now than earlier in the year when the central bank was “front-loading” rate hikes to catch up with accelerating prices.

“It’s not as important how fast we go,” he said, noting the bigger question facing policymakers is finding an “appropriately restrictive” endpoint and determining how long to stay there.

“Our focus right now is really on moving our policy stance to one that is restrictive enough to ensure a return of inflation to our 2% goal over time, it’s not on rate cuts,” Powell said.

“The inflation data received so far in October and November show a welcome reduction in the pace of price increases, but it will take substantially more evidence to give confidence inflation is on a sustained downward path,” Powell said. — Reuters

NEW YORK, Dec 14 ― US stocks rose yesterday after a unexpectedly small consumer price increase buoyed optimism that the Federal Reserve could soon dial back its inflation-taming interest rate hikes, but concerns remained the central back could stay aggressive.

The benchmark S&P 500 jumped as much as 2.76 per cent to a three-month high early in the trading session on news that November US consumer prices barely rose as gasoline and used cars cost less, leading to the smallest annual inflation increase in nearly a year at 7.1 per cent.

Rising expectations for smaller and slower Fed rate hikes sent US Treasury yields sharply lower and helped lift rate-sensitive gauges like the S&P 500 growth index, up 1.18 per cent, and the S&P 500 real estate index up 2.04 per cent to their highest intraday levels in nearly three months. The real estate sector notched its biggest daily percentage gain in two weeks as the best performing of the 11 major sectors.

Fed funds futures prices implied a better-than-even chance that the Fed will follow an expected half-point rate hike this week, with smaller 25-basis point hikes at its first two meetings of 2023, and stopping shy of 5 per cent by March.

Morgan Stanley’s chief US economist Ellen Zentner now sees even smaller Fed rate hikes, of 25 basis points at the central bank’s February meeting, and no further increases in March, leaving the peak fed funds rate at 4.625 per cent.

Still, equities pared gains ahead of the Fed’s policy statement today, in which the central bank is widely expected to announce a 50 basis point rate hike.

“There was some excitement early on that the CPI number was once again below expectations ― it shows some sequential cooling ― but once we saw that initial pop, stock investors kind of reassessed,” said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah.

“That probably took some of the steam out of the markets once investors realised tomorrow very well may be (Fed Chair) Jerome Powell throwing cold water on the rally today.”

The Dow Jones Industrial Average rose 103.6 points, or 0.3 per cent, to 34,108.64, the S&P 500 gained 29.09 points, or 0.73 per cent, to 4,019.65 and the Nasdaq Composite added 113.08 points, or 1.01 per cent, to 11,256.81.

Energy, up 1.77 per cent, was among the best performing S&P sectors on the day as the softer-than-anticipated inflation data sent the dollar lower and boosted crude oil prices.

The consumer inflation numbers follow November’s producer prices report last week, which was slightly higher than expected but pointed to a moderation in the trend.

Still, some questioned whether the trend in prices could continue.

“Today’s CPI print is incrementally good, but it needs to be sustained,” said Venu Krishna, head of US equity strategy at Barclays in New York.

“There is a big question mark whether we can really come to the 2 per cent inflation (Fed target). Perhaps we live in a world in which it will be higher and that means rates will be higher and then multiples will certainly be lower.”

Moderna Inc surged 19.63 per cent after the biotechnology firm’s experimental vaccine in combination with Merck & Co Inc’s blockbuster drug Keytruda showed promising results in a skin cancer study. Merck shares advanced 1.78 per cent.

Pinterest Inc PINS.N jumped 11.90 per cent after Piper Sandler upgraded the social media platform’s stock to “overweight” from “neutral.”

Advancing issues outnumbered declining ones on the NYSE by a 2.83-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favoured advancers.

The S&P 500 posted 18 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 92 new highs and 212 new lows. ― Reuters

By David French

(Reuters) – Wall Street ended lower on Tuesday, with the S&P 500 extending its losing streak to four sessions, as skittish investors fretted over Federal Reserve rate hikes and further talk of a looming recession.

Meta Platforms Inc (NASDAQ:META) dragged down markets, with its shares sliding 6.8% following reports that European Union regulators have ruled the company should not require users to agree to personalized ads based on their digital activity.

However, technology names generally suffered as investors applied caution toward high-growth companies whose performance would be sluggish in a challenging economy. Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) Inc fell between 2.5% and 3%, while the tech-heavy Nasdaq was pulled lower for a third straight session.

Most of the 11 major S&P sectors declined, with energy and communications services joining technology as leading laggards. Utilities, a defensive sector often preferred during times of economic uncertainty, was the only exception, gaining 0.7%.

Future economic growth prospects were in focus on Tuesday following comments from financial titans pointing toward uncertain times ahead.

Bank of America Corp (NYSE:BAC)’s chief executive predicted three quarters of mild negative growth next year, while JPMorgan Chase (NYSE:JPM) and Co’s CEO Jamie Dimon said inflation will erode consumer spending power and that a mild to more pronounced recession was likely ahead.

Their comments came on the heels of recent views from BlackRock (NYSE:BLK) and others that believe the U.S. Federal Reserve’s aggressive monetary tightening to combat stubbornly high price rises could induce an economic downturn in 2023.

“The market is very reactive right now,” said David Sadkin, president at Bel Air Investment Advisors.

He noted that, while markets traditionally reflect the future, right now they are moving up and down based on the latest headlines.

Fears about economic growth come amid a re-evaluation by traders of what path future interest rate hikes will take, following strong data on jobs and the services sector in recent days.

Money market bets are pointing to a 91% chance that the U.S. central bank might raise rates by 50 basis points at its Dec. 13-14 policy meeting, with rates expected to peak at 4.98% in May 2023, up from 4.92% estimated on Monday before service-sector data was released.

The S&P 500 rallied 13.8% in October and November on hopes of smaller rate hikes and better-than-expected earnings, although such Fed expectations could be undermined by further data releases, including producer prices due out on Friday.

“The market got ahead of itself at the end of November, but then we got some good economic data, so people are re-evaluating what the Fed is going to do next week,” said Bel Air’s Sadkin.

The Dow Jones Industrial Average fell 350.76 points, or 1.03%, to close at 33,596.34, the S&P 500 lost 57.58 points, or 1.44%, to finish at 3,941.26 and the Nasdaq Composite dropped 225.05 points, or 2%, to end on 11,014.89.

Jitters on the direction of global growth have also weighed on oil prices, with U.S. crude slipping to levels last seen in January, before Russia’s invasion of Ukraine disrupted supply markets. The energy sector fell 2.7% on Tuesday.

Banks are among the most sensitive stocks to an economic downturn, as they potentially face negative effects from bad loans or slowing loan growth. The S&P banks index slipped 1.4% to its lowest close since Oct. 21.

Volume on U.S. exchanges was 11.01 billion shares, in line with the average for the full session over the last 20 trading days.

The S&P 500 posted three new 52-week highs and nine new lows; the Nasdaq Composite recorded 52 new highs and 262 new lows.

Investing.com — The Dow slumped Monday as fresh data pointing to strength in the economy and further signs of inflation pressures stoked concerns about higher for longer interest rates ahead of the Federal Reserve’s meeting next week.

The Dow Jones Industrial Average slipped 1.4%, or 482 points, the Nasdaq 1.9%, and the S&P 500 fell 1.7%.

Services activity, which has been an area of the economy flagged by the Fed as a key contributor to inflation, rose by more than expected in November, stoking fresh concerns about more hawkish Fed monetary policy measures.

ISM services data for November showed a jump to 56.5, well above expectations of 53.3, while prices paid index component of the report, a gauge of inflation, “remains sticky at a very high level,” Jefferies said in a note.

The Fed is expected to slow the pace of interest rates at its meeting next week, but recent data including the red-hot jobs report on Friday shows that “they are going to have to hold rates at a high level (sufficiently restrictive) for quite a while to get inflation back down to the 2% target,” Jefferies added.

Treasury yields rose as investors weigh up the prospect of higher for longer interest rates to bring down inflation, pressuring growth sectors of the market including tech and consumer stocks.

Tesla (NASDAQ:TSLA) fell 6% as the electric vehicle company is reportedly set to cut production of its Model Y vehicle by more than 20% at its Gigafactory in Shanghai.

VF Corporation (NYSE:VFC) also dragged consumer stocks lower after tumbling more than 11% as it warned on profit for the second half of the year and announced that its chief executive was departing.

Energy led the declined nearly 3% driven by a plunge in oil prices despite OPEC and its allies, known as OPEC+,  keeping production plans unchanged and China easing Covid restrictions over the weekend.

EQT Corporation (NYSE:EQT), Halliburton Company (NYSE:HAL), and Marathon Petroleum Corp (NYSE:MPC) led the losses in the energy sector.

Despite the weaker start to the week for stocks, some on Wall Street believe that the broader market may have bottomed, and are likely to continue to search for direction in the months ahead.

“Overall the markets are in basing / bottoming mode heading into 2023- although we believe the lows are either close or have already been established (October levels),” Janney Montgomery Scott said in a note.

Investing.com – U.S. stock futures were trading in a tight range during Sunday’s evening deals, after major benchmark averages extended gains for the 4th consecutive week to finish near 8-month highs as speculation of smaller rate hikes from the Federal Reserve boosted risk sentiment.

By 6:40pm ET (11:40pm GMT) Dow Jones Futures were down 0.1% while S&P 500 Futures and Nasdaq 100 Futures declined 0.2% apiece.

Ahead in the week, market participants will be looking toward Monday’s S&P global composite, Markit Services and ISM Non-Manufacturing PMIs and October’s Factory orders. Import and Export data comes in on Tuesday, quarterly Nonfarm Productivity on Wednesday, jobless claims on Thursday, as well as PPI and Michigan consumer sentiment prints set for release on Friday.

On the earnings front, results from companies including Costco Wholesale Corp (NASDAQ:COST), AutoZone Inc (NYSE:AZO) and Broadcom Inc (NASDAQ:AVGO) will be monitored throughout the week.

During Friday’s trade, the Dow Jones Industrial Average added roughly 35 points, or was 0.1% higher. The S&P 500 declined 0.1%, while the NASDAQ Composite dipped 0.2%. For the week, the Dow gained 0.5%, the S&P 500 lifted 1.6% and the NASDAQ added 2.8%.

On the data front, Nonfarm Payrolls came in at 263K jobs, above expectations of 200K and signaling further normalization after protracted pandemic disruptions, while boosting bets for less aggressive rate hikes at the Federal Reserve’s December meeting.

On the bond markets , United States 10-Year rates fell to 10-week lows of 3.492%.

Investing.com — The Dow slipped Thursday following a Powell-fueled rally a day earlier as investors weighed up mixed economic data underscoring weak manufacturing activity and a still resilient consumer ahead of a key jobs report due Friday.

The Dow Jones Industrial Average slipped 0.56%, or 154 points, the Nasdaq gained 0.13% and the S&P 500 was down 0.1%.

Manufacturing activity slipped into contraction in November, falling below a reading of 50 for the first time since May 2020.

Treasury yields fell sharply as fears mount that the economy could be set for a deeper recession next year, even as the consumer remains resilient.  

Personal spending was in line with forecasts in October, underpinned by lower fuel prices, while inflation unexpectedly slipped last month.  

Financials, meanwhile, were the biggest drag on the broader market, paced by a decline in banking stocks as falling Treasury yields tend to weigh on net interest margin — the difference between the interest income generated by banks and the amount of interest paid out to depositors.

Synchrony Financial (NYSE:SYF), SVB Financial Group (NASDAQ:SIVB), and Bank of America Corp (NYSE:BAC) slumped with the latter down more than 2%.

Tech stocks modestly added to gains from a surge a day earlier, with Apple (NASDAQ:AAPL) ending the day above the flatline despite ongoing worry about the impact of lower iPhone production.

Piper Sandler cut its forecast on fourth-quarter iPhone sales to 74 million units, down from a previous estimate of 83 million amid supply chain woes in China.

Netflix Inc (NASDAQ:NFLX), however, continued to rack up gains, rising about 4%.

Elsewhere in tech, Salesforce (NYSE:CRM) plunged 8% after unexpectedly announcing the departure of co-chief executive Bret Taylor.

On the earnings front, Costco Wholesale (NASDAQ:COST) fell more than 6% after reporting weaker than expected sales for November, raising worries about consumer spending in the run-up to the key holiday quarter.

Dollar General Corporation (NYSE:DG), meanwhile, cut its outlook on profit after reporting quarterly earnings that fell short of Wall Street estimates, sending its shares almost 8% lower.

Economic data will likely continue to garner the bulk of attention as monthly jobs data is expected to show the economy produced less jobs in November than the prior month.

“Nonfarm payroll employment growth likely slowed to 180,000 in November from 261,000 in October as evidence continues to build that increasing uncertainty is affecting hiring activity,” Nomura said in a note.