Stocks finished lower Thursday as investors reacted to rising oil prices and concerns that the Federal Reserve may not cut interest rates this year.
The Dow Jones Industrial Average posted its fourth straight losing session, finishing down 530 points to 38,596.98. The S&P 500 lost 1.23% to 5,147.21 and the tech-heavy Nasdaq dropped 1.40% to 16,049.08.
Minneapolis Federal Reserve Bank President Neel Kashkari said on Thursday that at the U.S. central bank's meeting last month he penciled in two interest rate cuts this year but if inflation continues to stall, none may be required by year end, according to Reuters.
"If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all," Kashkari said during an interview with Pensions & Investments. "There's a lot of momentum in the economy right now."
Kashkari added that if inflation continued to come in stronger than hoped, he anticipates the Fed would hold its benchmark policy rate at the current 5.25%-5.50% range for a longer period of time.
Fed Chair Jerome Powell repeated his view Wednesday that rate cuts are likely to begin later this year, but said he and his colleagues "have time to let the incoming data guide our decisions on policy." and would act on a "meeting by meeting" basis.
Updated at 12:15 PM EDT
The elephant in the Fed
Richmond Fed President Thomas Barkin added his name to the growing list of policymakers seeking more time, and more data, in order to clarify the timing of forecasted rate cuts over the coming months.
Speaking to an event hosted by the Home Building Association of Richmond, Barkin, a voting member of the Fed's rate-setting Open Markets Committee, said recent upticks in inflation "raise the question of whether we are seeing a real shift in the economic outlook, or merely a bump along the way."
"I think it is smart for the Fed to take our time," Barkin said. "No one wants inflation to reemerge. And given a strong labor market, we have time for the clouds to clear before beginning the process of toggling rates down."
https://t.co/HFKxiMHxeE pic.twitter.com/tEgYMoqxtU
— Ivan the K™ (@IvanTheK) April 4, 2024
Updated at 10:10 AM EDT
Solid start
Stocks are off to a solid start, with the S&P 500 rising 35 points, or 0.68%, in the opening half hour of trading, with the Dow rising 145 points and the Nasdaq 141 points.
S&P 500 Opening Bell Heatmap (Apr. 04, 2024)$SPY +0.74% 🟩$QQQ +0.96% 🟩$DJI +0.71% 🟩$IWM +1.27% 🟩 pic.twitter.com/Leo5SUKbuG
— Wall St Engine (@wallstengine) April 4, 2024
Updated at 9:08 AM EDT
Mr. Green Jeans
Levi Strauss (LEVI) shares surged higher in early trading after the iconic clothing maker posted stronger-than-expected first quarter earnings and boosted its full-year profit outlook.
Levi Strauss, which also owns the Dockers and Denizen brands, cited cost cutting and stable consumer spending for the improved outlook, which sees n adjusted profit between $1.17 and $1.27 per share for 2024, a 2 cent improvement from its prior forecast.
Levi shares were marked 13.7% higher in pre-market trading to indicate an opening bell price of $21.22 each, a move that would extend the stock's year-to-date gain to around 27%.
The strength in levi's tells you it is NOT the consumer, it is the consumer who didn't go to Ulta who is spending. We told club members great entry point for $PG. Looking to get bigger still
— Jim Cramer (@jimcramer) April 4, 2024
Updated at 8:38 AM EDT
Workin' for a Livin'
Around 221,000 Americans filed for new jobless benefits last week, Labor market data indicated Thursday, a bigger than expected jump of 9,000 applications that takes the four-week average to 214,250.
Research group Challenger Gray, meanwhile, said overall March job cuts rose 7% from February to 84,638, a level takes the first quarter tally to around 257,254, a 5% decline from last year's levels.
Stock Market Today
Stocks ended modestly higher yesterday, with the S&P 500 adding around 0.11%, after a hotter-than-expected reading for private sector hiring from ADP's National Employment report was partly offset by an ISM survey that showed muting price gains in the services sector.
ISM's benchmark activity survey, which tracks activity in the economy's biggest growth driver, suggested a solid but fading level of expansion in March matched with easing price pressures, the kind of 'golidlocks' reading that could signal a 'soft landing' later in the year.
"On balance, the U.S. economy looks to be in pretty good shape, with a strong job market supporting employment and wage gains," said Comerica Bank's chief economist Bill Adams.
"High interest rates and the cost of living are problems for many Americans, but inflation generally still seems to be moving lower in a two steps down, one step up process," he added.
Comments from Federal Reserve Chairman Jerome Powell at an economics event in Stanford, meanwhile, added no new challenges to the central bank's message of 'patience' on the timing of rate cuts, with investors still primed for the first Fed reduction since the pandemic emergency in March of 2020 later this spring.
The US. dollar index reflected some of that dovishness in overnight trading as it eased 0.14% against a basket of its global peers to trade at 104.092, while benchmark 2-year notes held steady at 4.685%.
The CME Group's FedWatch now pegs the odds of a June cut at around 58.5%, with a follow-on cut likely coming in September.
Investors will now track both today's reading of weekly jobless claims, slated for 8:30 am Eastern time, as well as tomorrow's March employment report, which is expected to show 205,000 new hires and a headline unemployment rate of 3.9%.
On Wall Street, stocks are likely to remain muted ahead of tomorrow's payroll report, with the market's benchmark volatility gauge holding at $14.22, near to the lowest levels in five years.
Futures contracts tied to the S&P 500 are priced for a 17 point opening bell gain, while those linked to Dow Jones Industrial Average are suggesting a 120 point advance.
The tech-focused Nasdaq is looking at a 98 point gain, with Tesla (TSLA) , Micron (MU) and Sofi Technologies (SOFI) three of the most-active movers in pre-market dealing.
In other markets, gold prices hit a fresh record high of $2,304.09 per ounce, taking its year-to-date gain to around 11.5%, while copper prices hit a 14-month high of $9,344 per ton on the London Metals Exchange.
In overseas markets, Europe's Stoxx 600 was marked 0.09% higher on the session following S&P Global's benchmark PMI reading that showed activity around the region expanded for the first time in nearly a year last month..
Paired with slowing inflation and a dovish ECB, which is likely to begin the first of four rate cuts in June, and stocks in the region could be primed for solid gains into the back half of the year.
Overnight in Asia, Japan's Nikkei 225 closed 0.81% higher at 39,773.14 points as the yen held at a 34-year low of 151.80 against the U.S. dollar, while the regional MSCI ex-Japan benchmark rode last night's gains on Wall Street to a 0.53% advance.
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