In today’s stock market update, Wall Street is experiencing a slight downturn, marking a rare stumble following a substantial rally. The decline comes after the market reached its highest level since the beginning of August.
As of 9:40 a.m. Eastern time, the S&P 500 is down 0.3%, poised for only its third loss in the last 17 days. Simultaneously, the Dow Jones Industrial Average has slipped by 0.3%, or 100 points, and the Nasdaq composite is 0.4% lower.
The mixed performance of retailers is a notable factor today, particularly after the release of their latest quarter earnings and forecasts for the upcoming holiday shopping season. Lowe’s, despite reporting better-than-expected profits, saw a 2.9% decline as its revenue fell short of Wall Street estimates, leading to cuts in full-year revenue and profit forecasts. Best Buy also faced a 4.5% drop, even though it exceeded profit expectations, with its revenue falling short. Best Buy’s CEO cited challenges in predicting customer demand.
The stocks of oil-and-gas companies weakened as the price of crude oil declined. Benchmark U.S. crude fell 1% to $77.08 per barrel, and Brent crude, the international standard, dipped 0.7% to $81.78 per barrel. This influenced declines in Marathon Petroleum (down 1.5%) and Exxon Mobil (down 0.8%).
On a positive note, Dick’s Sporting Goods experienced a 10% surge after reporting stronger-than-expected profit and revenue for the third quarter. This contributed to an overall optimistic outlook as the sporting goods retailer raised its forecasts for full-year results.
The current earnings reporting season for the summer has been mostly better than anticipated, with companies in the S&P 500 on track to deliver their first year-over-year growth in earnings per share in a year, according to FactSet.
However, the broader market movements have been significantly impacted by interest rates. Rising hopes that inflation has cooled enough for the Federal Reserve to consider rate cuts have boosted stocks. Recent economic reports indicating a slowdown in inflation and economic activity have led traders to adjust their expectations for when the Fed might cut rates, with a 27.5% chance in March and nearly 62% by May.
This shift in expectations has caused Treasury yields to decline, with the yield on the 10-year Treasury falling to 4.40% from 4.42% on Tuesday. Just a few weeks ago, the 10-year yield was above 5%, its highest level since 2007.
While a drop in Treasury yields and a rally in stock prices could stimulate the economy, there is caution, as such movements may also exert upward pressure on inflation. The Federal Reserve’s stance on interest rates will be closely watched, with expectations that recent communications from Fed officials suggest a decreased likelihood of a December hike and a potential shift in the hiking cycle.
Later today, the Federal Reserve will release the minutes from its last meeting, providing further insights into its considerations on interest rates.
In global stock markets, indexes across Europe and Asia are mixed, with modest movements observed.
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