(Alliance News) - Stocks ended a choppy session mixed, while the dollar rallied as Jerome Powell stated policymakers are in no rush to cut interest rates.
On Wall Street, the Dow Jones Industrial Average rose 63.86 points, 0.2%, to 37,798.97. The S&P 500 fell 10.41 points, 0.2%, at 5,051.41 and the Nasdaq Composite declined 19.77 points, 0.1%, at 15,865.25.
Officials at the US Federal Reserve have sought evidence that inflation is falling closer to their 2% remit, but a series of hot data points have thwarted those hopes so far.
"The recent data have clearly not given us greater confidence, and instead indicate that it's likely to take longer than expected to achieve that confidence," Fed Chair Powell said during an event in Washington.
"That said, we think policy is well positioned to handle the risks that we face," he added.
In March, Fed policymakers pencilled in three rate cuts for this year, leading markets to price in the first of them as early as June.
But hot March consumer inflation data caused many traders to reevaluate and push back their expectations.
"If higher inflation does persist, we can maintain the current level of restriction for as long as needed," Powell said. "At the same time, we have significant space to ease should the labour market unexpectedly weaken."
"Right now, given the strength of the labour market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us," he added.
Powell's comments saw the dollar rise once more. The pound traded at USD1.2433 late Tuesday, down from USD1.2446 at the time of the New York equities close on Monday. The euro traded at USD1.0621, down versus USD1.0625. Versus the yen, the greenback rose to JPY154.69 from JPY154.23.
Jonathan Petersen at Capital Economics thinks given the continued resilience in the US economy looks set to delay the Fed easing cycle until (at least) the second half of this year, that the greenback will stay strong against most currencies over the next couple of quarters.
"We now think Fed will follow through on its recent "higher for longer" messaging and only cut rates twice later this year. By contrast, most other G10 central banks still look set to ease policy before that," he stated.
On Tuesday, industrial production rose in line with market expectations in March, according to new data from the Federal Reserve.
Industrial production rose by by 0.4% in March from February, having edged up 0.1% in February on-month.
According to FXStreet, the figure came in in line with market expectations.
Elsewhere, building permits and housing starts fell on-month in March, the US Census Bureau reported.
Building permits for privately-owned houses came to 1.46 million in March, down from 1.52 million in February.
The most recent figure was also above FXStreet-cited consensus of 1.51 million building permits.
Meanwhile, privately-owned housing starts were at 1.32 million in March, down from 1.55 million in February. This was also behind of consensus of 1.48 million.
The ongoing resilience of the US economy was shown in predictions from the International Monetary Fund.
The IMF expects growth in the US to hit 2.7% this year, up 0.6 percentage points from the January forecast, marking an acceleration from the 2.5% growth recorded in 2023.
Growth in the world's largest economy is then expected to slow to 1.9% in 2025, slightly higher than previously expected.
On Wall Street, UnitedHealth was the best performing stock in the Dow, up 5.2%, after it reported higher revenue in the first quarter.
The Minnesota based managed healthcare provider saw first quarter revenue rise annually to USD99.8 billion from USD91.9 billion.
Earnings from operations fell to USD7.9 billion from USD8.5 billion.
Looking ahead, UnitedHealth maintained its adjusted net earnings outlook of between USD27.50 to USD28.00 in 2024.
Results from Morgan Stanley were also received.
Shares rose 3.5% after the investment bank reported increased first quarter revenue and net income, with contributions across each of its main businesses.
In the three months to March 31, Morgan Stanley said revenue climbed 4.2% to USD15.14 billion from USD14.52 billion a year prior.
Net income increased to 14% to USD3.41 billion from USD2.98 billion and diluted earnings per share rose by 19% to USD2.02 from USD1.70.
But Bank of America fell 3.5% despite first quarter results beating market expectations driven by strong results in its investment banking arm.
In the three months to March 31, BofA reported net income of USD6.67 billion, or USD0.76 per diluted share, compared to USD8.16 billion, or USD0.94 per diluted share a year prior.
Excluding a USD700 million Federal Deposit Insurance Corp assessment, net income totalled USD7.2 billion, or USD83 cents a share, BofA said.
Total revenue edged down 1.7% to USD25.82 billion from USD26.26 billion.
A LSEG-cited consensus forecast revenue of USD25.46 billion and adjusted EPS of USD0.76 per share.
The performance reflected higher investment banking and asset management fees, as well as sales and trading revenue, and lower net interest income, BofA said.
Johnson & Johnson also slipped after its results, despite raising its dividend for the first quarter and upgrading guidance, after swinging to net earnings from a loss.
For the three months ended March 31, the New Brunswick, New Jersey-based pharmaceutical company reported worldwide sales of USD21.38 billion, up 2.3% from USD20.89 billion a year prior.
Of this, worldwide operational sales for the Innovative Medicine segment grew 1.1% to USD13.56 billion from USD13.41 billion, while MedTech sales grew 4.5% to USD7.82 billion from USD7.48 billion.
Net earnings were USD5.35 billion, swung from a net loss of USD491 million in the same quarter the previous year. Earnings per share were USD2.20, swung from a loss per share of USD0.19.
Shares in J&J fell 2.1%.
Brent oil fell to USD89.92 a barrel late Tuesday, from USD90.31 on Monday. West Texas Intermediate declined to USD85.25 a barrel from USD85.61. Gold rose to USD2,389.74 an ounce from USD2,384.96.
In London on Monday, the FTSE 100 closed down 1.8%. Frankfurt's DAX 40 closed down 1.4% and the CAC 40 in Paris ended down 1.4%.
In Asia on Tuesday, the Nikkei 225 index in Tokyo fell 1.9%. In China, the Shanghai Composite shed 1.7% lower, while the Hang Seng in Hong Kong ended down 2.1%. The S&P/ASX 200 fell 1.8% in Sydney.
Wednesday's economic calendar sees UK CPI and PPI figures at 0700 BST, eurozone CPI at 1000 BST and the Federal Reserve Beige Book at 1900 BST.
The New York corporate calendar on Wednesday sees third quarter results from Lam Research.
By Jeremy Cutler, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2024, Alliance News
NEW YORK MARKET CLOSE: Dollar up as Powell sees no rush to lower rates
(Alliance News) - Stocks ended a choppy session mixed, while the dollar rallied as Jerome Powell stated policymakers are in no rush to cut interest rates.
On Wall Street, the Dow Jones Industrial Average rose 63.86 points, 0.2%, to 37,798.97. The S&P 500 fell 10.41 points, 0.2%, at 5,051.41 and the Nasdaq Composite declined 19.77 points, 0.1%, at 15,865.25.
Officials at the US Federal Reserve have sought evidence that inflation is falling closer to their 2% remit, but a series of hot data points have thwarted those hopes so far.
"The recent data have clearly not given us greater confidence, and instead indicate that it's likely to take longer than expected to achieve that confidence," Fed Chair Powell said during an event in Washington.
"That said, we think policy is well positioned to handle the risks that we face," he added.
In March, Fed policymakers pencilled in three rate cuts for this year, leading markets to price in the first of them as early as June.
But hot March consumer inflation data caused many traders to reevaluate and push back their expectations.
"If higher inflation does persist, we can maintain the current level of restriction for as long as needed," Powell said. "At the same time, we have significant space to ease should the labour market unexpectedly weaken."
"Right now, given the strength of the labour market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us," he added.
Powell's comments saw the dollar rise once more. The pound traded at USD1.2433 late Tuesday, down from USD1.2446 at the time of the New York equities close on Monday. The euro traded at USD1.0621, down versus USD1.0625. Versus the yen, the greenback rose to JPY154.69 from JPY154.23.
Jonathan Petersen at Capital Economics thinks given the continued resilience in the US economy looks set to delay the Fed easing cycle until (at least) the second half of this year, that the greenback will stay strong against most currencies over the next couple of quarters.
"We now think Fed will follow through on its recent "higher for longer" messaging and only cut rates twice later this year. By contrast, most other G10 central banks still look set to ease policy before that," he stated.
On Tuesday, industrial production rose in line with market expectations in March, according to new data from the Federal Reserve.
Industrial production rose by by 0.4% in March from February, having edged up 0.1% in February on-month.
According to FXStreet, the figure came in in line with market expectations.
Elsewhere, building permits and housing starts fell on-month in March, the US Census Bureau reported.
Building permits for privately-owned houses came to 1.46 million in March, down from 1.52 million in February.
The most recent figure was also above FXStreet-cited consensus of 1.51 million building permits.
Meanwhile, privately-owned housing starts were at 1.32 million in March, down from 1.55 million in February. This was also behind of consensus of 1.48 million.
The ongoing resilience of the US economy was shown in predictions from the International Monetary Fund.
The IMF expects growth in the US to hit 2.7% this year, up 0.6 percentage points from the January forecast, marking an acceleration from the 2.5% growth recorded in 2023.
Growth in the world's largest economy is then expected to slow to 1.9% in 2025, slightly higher than previously expected.
On Wall Street, UnitedHealth was the best performing stock in the Dow, up 5.2%, after it reported higher revenue in the first quarter.
The Minnesota based managed healthcare provider saw first quarter revenue rise annually to USD99.8 billion from USD91.9 billion.
Earnings from operations fell to USD7.9 billion from USD8.5 billion.
Looking ahead, UnitedHealth maintained its adjusted net earnings outlook of between USD27.50 to USD28.00 in 2024.
Results from Morgan Stanley were also received.
Shares rose 3.5% after the investment bank reported increased first quarter revenue and net income, with contributions across each of its main businesses.
In the three months to March 31, Morgan Stanley said revenue climbed 4.2% to USD15.14 billion from USD14.52 billion a year prior.
Net income increased to 14% to USD3.41 billion from USD2.98 billion and diluted earnings per share rose by 19% to USD2.02 from USD1.70.
But Bank of America fell 3.5% despite first quarter results beating market expectations driven by strong results in its investment banking arm.
In the three months to March 31, BofA reported net income of USD6.67 billion, or USD0.76 per diluted share, compared to USD8.16 billion, or USD0.94 per diluted share a year prior.
Excluding a USD700 million Federal Deposit Insurance Corp assessment, net income totalled USD7.2 billion, or USD83 cents a share, BofA said.
Total revenue edged down 1.7% to USD25.82 billion from USD26.26 billion.
A LSEG-cited consensus forecast revenue of USD25.46 billion and adjusted EPS of USD0.76 per share.
The performance reflected higher investment banking and asset management fees, as well as sales and trading revenue, and lower net interest income, BofA said.
Johnson & Johnson also slipped after its results, despite raising its dividend for the first quarter and upgrading guidance, after swinging to net earnings from a loss.
For the three months ended March 31, the New Brunswick, New Jersey-based pharmaceutical company reported worldwide sales of USD21.38 billion, up 2.3% from USD20.89 billion a year prior.
Of this, worldwide operational sales for the Innovative Medicine segment grew 1.1% to USD13.56 billion from USD13.41 billion, while MedTech sales grew 4.5% to USD7.82 billion from USD7.48 billion.
Net earnings were USD5.35 billion, swung from a net loss of USD491 million in the same quarter the previous year. Earnings per share were USD2.20, swung from a loss per share of USD0.19.
Shares in J&J fell 2.1%.
Brent oil fell to USD89.92 a barrel late Tuesday, from USD90.31 on Monday. West Texas Intermediate declined to USD85.25 a barrel from USD85.61. Gold rose to USD2,389.74 an ounce from USD2,384.96.
In London on Monday, the FTSE 100 closed down 1.8%. Frankfurt's DAX 40 closed down 1.4% and the CAC 40 in Paris ended down 1.4%.
In Asia on Tuesday, the Nikkei 225 index in Tokyo fell 1.9%. In China, the Shanghai Composite shed 1.7% lower, while the Hang Seng in Hong Kong ended down 2.1%. The S&P/ASX 200 fell 1.8% in Sydney.
Wednesday's economic calendar sees UK CPI and PPI figures at 0700 BST, eurozone CPI at 1000 BST and the Federal Reserve Beige Book at 1900 BST.
The New York corporate calendar on Wednesday sees third quarter results from Lam Research.
By Jeremy Cutler, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2024, Alliance News