The latest update on inflation has once again put a damper on stock market activity. Early trading on Friday saw the S&P 500 slip 0.2% after reaching a record high the day before. The Dow also fell by 0.4%, while the Nasdaq composite remained relatively unchanged. This report on wholesale inflation serves as a stark reminder that the battle against rising prices is ongoing. Following the report, Treasury yields surged in the bond market, closing the door on hopes for a potential interest rate cut by the Federal Reserve in March.
Despite the mixed trading, futures for the S&P 500 gained 0.1% before the bell, while futures for the Dow Jones Industrial Average dipped 0.1%. While earnings season is winding down, there are still more sales and profit reports coming in, along with various economic indicators that continue to impact the markets.
Recent economic data has been mixed, with a report showing weaker-than-expected sales at U.S. retailers in January, indicating a significant drop in consumer spending. However, another report showed fewer U.S. workers applying for unemployment benefits, signaling a robust job market despite some high-profile layoffs.
Overall, these economic reports have led to fluctuations in Treasury yields, as stronger-than-expected data has delayed forecasts for when the Federal Reserve might begin cutting interest rates. The hope is that maintaining high rates will help control inflation without triggering a recession.
In other market news, technology manufacturer Applied Materials saw a significant increase in premarket trading after reporting better-than-expected sales and profit figures. However, cloud storage company Dropbox experienced a sharp decline in after-hours trading due to weak guidance for the first quarter, despite surpassing analysts’ fourth-quarter sales and profit targets. Online business review site Yelp also fell before the bell after missing profit forecasts.
In Asia, Tokyo’s Nikkei 225 index traded near a record high, 35 years after its peak before the collapse of Japan’s financial bubble. Despite signs of weakness in the Japanese economy, efforts to sustain growth have had limited success. Changes to tax-free investment accounts and a weak yen have contributed to the rise in Japanese share prices.
In Europe, major indices such as Germany’s DAX and France’s CAC 40 showed gains at midday trading, while Britain’s FTSE 100 climbed as well.
In the commodity markets, U.S. benchmark crude oil and Brent crude both saw declines, while the U.S. dollar rose against the Japanese yen but slipped slightly against the euro.
Overall, the stock market continues to react to economic data and corporate earnings reports, with investors closely watching for signs of inflation and the Federal Reserve’s next moves regarding interest rates.
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