US Stocks Hit by Stronger Data – Dow Drops 1.5%
US Stock markets took a hit yesterday as another strong data print pointed to interest rates remaining higher for longer in the states. Flash Manufacturing and Service PMI data results came in higher than expected and the Dow took the brunt of the move, closing down 1.53% on the day, the S&P and Nasdaq also took a hit finishing down 0.74% and 0.39% respectively but they were cushioned somewhat by rampant Nvidia stocks. US treasury yields pushed up again with the 2-year hitting a 3-week high, up 5.5 basis points at 4.933% whilst the 10-year gained 4.1 basis points to trade up to 4.474% by the close. The dollar pushed higher across the board, edging up 0.2% against the major currencies and powering against commodities, Oil prices falling again with Brent off 0.7% and WTI down 0.9% whilst Gold took another beating, losing 1.8% on the day to close at $2,336 per ounce.
Fed Repricing Hits Markets
US Stock markets have had a bit of a rollercoaster ride this week as the major indices all celebrated hitting record highs early in the week before suffering from a couple of days of extended hangovers as we push into the weekend. Wednesday’s FOMC Meeting minutes have proved pivotal as they confirmed what many members have been saying recently; that interest rates are likely to remain higher for longer and that has since been backed up by stronger-than-expected data prints. The market is now just pricing in one rate cut in 2024 with many looking at September for that move, but traders are now concerned that this expectation could get pushed out and that could lead to harder corrections in the market. Data is going to play a key part in those moves and this could place an even harder emphasis on next week’s key PCE Price Index result.
Volatile Trading into the Weekend
Global financial markets are set to remain volatile into the weekend as US stocks took another step lower in trading yesterday. The event calendar also has a couple of key data points that could shake the market up further with any stronger US data prints likely to push risk sentiment lower. The Asian session has little scheduled to trouble the scorers, however, the UK is once again in focus early in the London session as the Retail Sales numbers are released, the expectation is for a 0.5% month-on-month decrease and anything significantly away from this should see more volatility for the pound. The New York session has Canadian Retail Sales data and US Durable Goods numbers both out early in the day before the University of Michigan’s revised Consumer Sentiment and Inflation Expectation data is released to take us into the weekend.
