Dow, S&P 500, Nasdaq slide as Powell says Fed in no ‘hurry’ on rate cuts

By Investor Empires On Nov 14, 2024

US stocks fell on Thursday as the post-election rally stalled further and investors took stock of comments from Federal Reserve Chairman Jerome Powell, who said in a speech that the central bank did not need to “rush” to cut interest rates.

Markets took a noticeable move lower after Powell’s comments. The Dow Jones Industrial Average (^DJI) fell 0.5%, or more than 200 points, while the S&P 500 (^GSPC) fell 0.6%. The Nasdaq Composite (^IXIC) fell about 0.7%, coming off a mixed day for the three major gauges.

Although the overall mood is subdued, stocks remain near recent records after recent consumer inflation data kept hopes of a December interest rate cut alive. high. But the wholesale inflation reading showed prices rose slightly more than expected in October, raising new questions about the Fed’s path next year.

The focus is on how the Fed and its chair see inflation developing as investors gauge the odds that interest rates will return to staying higher for longer. At this point, Powell emphasized the economic strength of the United States, saying that the Fed would “watch carefully” to ensure that inflation measures remained within an acceptable range.

Read more: What a Fed rate cut means for bank accounts, CDs, loans and credit cards

Meanwhile, Republicans maintained their slim majority in the House of Representatives, giving President-elect Donald Trump and his party unified control of power across Washington. The sweep limits restrictions on implementing the incoming president’s aggressive economic agenda, which helped spur the rapid rise in stocks after the election.

In some corners of the market, the “Trump trade” is showing signs of fatigue. Tesla (TSLA) stock fell more than 5% as Reuters reported that the Trump administration will look to eliminate the $7,500 tax break for consumers.

Meanwhile, vaccine stocks, including Moderna (MRNA) and Novavax (NVAX), fell at the close after… The reports said Trump will appoint anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services.

He lives 13 updates

Vaccine stocks fall after report of RFK Jr. appointment. To lead HHS

Vaccine stocks fell to a close Thursday afternoon after Politico reported that Donald Trump would appoint anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services.

Shares of Moderna (MRNA) and Novavax (NVAX) fell more than 5% after the report while shares of vaccine maker Pfizer (PFE) also fell more than 2.5%.
Fed doesn’t need to ‘rush’ to cut interest rates: Powell

Jennifer Schoenberger of Yahoo Finance reports:

Federal Reserve Chairman Jay Powell said the central bank does not need to be in “a rush” to cut interest rates because of the strength of the economy, and that the Fed will “watch carefully” to make sure some inflation measures remain within a range of acceptance. .

“The economy is not sending any signals that we need to accelerate interest rate cuts,” Powell said in prepared remarks for a speech in Dallas.

“The strength we are currently seeing in the economy gives us the ability to treat our decisions carefully.”

Read more here.
Formation of “DOGE” sinks stocks of government contractors

Another Trump trade is on the move.

Government contractor stocks fell on Thursday amid speculation that the new DOGE (Department of Government Efficiency) will look for areas to cut government spending. It is not clear exactly what action the newly formed administration led by Elon Musk and Vivek Ramaswamy will take.

But Musk has already proposed eliminating hundreds of existing agencies and cutting the more than $6 trillion annual budget by $2 trillion.

The market appears to be betting that some of these spending cuts will affect publicly traded government contractors. Shares of Science Applications International Corporation (SAIC), Booz Allen Hamilton (BAH), KBR (KBR), and Parsons Corporation (PSN) fell 6% or more on Thursday.

Interestingly, Lockheed Martin (LMT) stock fell 3%, perhaps serving as a reminder to investors that not all companies that work with the government are created equal. Currently, the market does not expect significant reductions in defense spending with Lockheed Martin.
Two steady episodes of inflation make Fed’s 2025 rate cut path ‘more uncertain’

October inflation readings this week showed little progress toward the Fed’s 2% inflation target, raising questions about how deeply the Fed will cut interest rates in 2025.

On Wednesday, the “core” CPI, which excludes the more volatile costs of food and gas, showed prices rising 3.3% for the third straight month during October. Then, the “core” producer price index on Thursday revealed prices rose 3.1% in October, compared with 2.8% the previous month and above economists’ expectations for a 3% increase.

Taken together, the readings add to the overall picture of persistent and sticky inflation within the economy. Economists don’t see the data changing the Fed’s December outlook. And the markets agree CME FedWatch tool It currently places a roughly 80% chance that the Fed will cut interest rates by 25 basis points at its December meeting.

But a recent lack of progress on the inflation front may prompt the Fed to revise its Summary of Economic Projections (SEP), which expected the central bank to cut interest rates four times, or by one percentage point in total, throughout 2025.

“The PPI will not decisively change the Fed’s dovish bias, but it does make drawing policy expectations more ambiguous,” Oren Klachkin, a nationwide financial market economist, wrote in a note to clients today. “We expect 75 (basis points) of cumulative Fed easing in 2025, but risks appear to be leaning toward a more gradual pace of easing.”

Read more here.
Trump will eliminate electric vehicle tax credit: Reuters

The administration of President-elect Donald Trump plans to eliminate the $7,500 tax break provided to consumers, According to a report by Reuters.

Shares of Ford (F), General Motors (GM), and Tesla (TSLA) fell after the report.
Bitcoin’s gains shrink, hovering above $88,000

Bitcoin (BTC-USD) pared earlier gains, hovering above $88.00 per coin by 12:30 PM ET.

The world’s largest cryptocurrency was at the heart of Trump’s trade, which spurred moves across a range of assets after Donald Trump won the White House last week.

On Thursday morning, each token was trading at around $91,000 after hitting new highs north of $93,000 in the previous session.

Year to date, Bitcoin is up almost 100%.
Bob Iger says Disney ‘doesn’t need more assets right now’ to thrive in ‘turbulent media world’

Alexandra Channel reports from Yahoo Finance:

Disney (DIS) CEO Bob Iger doesn’t believe the company needs to engage in mergers and acquisitions to compete in streaming.

“We don’t really need more assets right now, either from a distribution or a content perspective, to thrive in the disruptive media world,” the executive told investors on the company’s fourth-quarter earnings call Thursday morning.

“In a way, we’ve really strengthened our presence,” he said, citing the 21st Century Fox acquisitionwas announced in late 2017. “And while I think we will always look at opportunities opportunistically, as we’ve demonstrated in the past, we certainly don’t shy away from those opportunities… We’ve really strengthened our position in many respects.”

Disney shares rose Thursday after the entertainment giant issued better-than-expected guidance and quarterly results that beat estimates.

Read more here.
Tesla falls 3% as Trump trade declines after his election

Shares of Tesla ( TSLA ) fell more than 3.5% on Thursday as investors took profits off the table following a massive rally in Trump’s favorite “trade.”

With Thursday’s decline, the stock is still up more than 25% since Donald Trump won the White House last week on optimism that close ties between CEO Elon Musk and the president-elect will ease regulations on self-driving.

Meanwhile, the electric car giant on Wednesday issued its sixth recall this year. The company has recalled 2,400 Cybertruck pickup trucks due to a defective part that could cause a power outage and increase the risk of a crash.
Tapestry stock jumped 11%, and Capri fell after the companies finalized merger plans

Shares of Tapestry (TPR) rose Thursday to an 11-year high after its parent company Coach and Capri Holdings (CPRI) scrapped its merger plans.

The fashion companies mutually decided to abandon the $8.5 billion partnership, citing regulatory hurdles.

“The closing condition required to obtain the necessary US regulatory approvals is unlikely to be met by the merger agreement’s external deadline of February 10, 2025,” Capri said in a statement.

Capri shares fell 2% while Tapestry stock jumped as much as 11%.
Disney shares rise 10% after earnings beat, guidance beats estimates

Alexandra Channel reports from Yahoo Finance:

Disney (DIS) on Thursday reported fiscal fourth-quarter earnings per share and revenue that beat Wall Street estimates, as its direct-to-consumer business built on recent momentum and turned profitable.

Strong guidance for the next two years also fueled investor optimism, sending shares up more than 10% in early trading after the results.

Read more here.
The Dow, S&P 500 and Nasdaq rose with Powell’s speech on deck

The major averages opened mixed on Thursday as investors awaited Federal Reserve Chairman Jerome Powell’s speech while assessing the Republican sweep in Congress.

The Dow Jones Industrial Average (^DJI) rose 0.2%, while the S&P 500 (^GSPC) rose slightly. The Nasdaq Composite Index (^IXIC) rose 0.1%.

Republicans won control of the House on Wednesday, completing their vote 2024 elections “Trekta”.

Investors have been watching the rise in the US Dollar Index (DX-Y.NYB) and the effects it could have on the markets. Commodities such as oil and gold, which are billed in dollars, have come under pressure in recent days.

Bitcoin (BTC-USD) settled above $91,000 on Thursday morning after rising above $93,000 in the previous session.

The world’s largest cryptocurrency was at the heart of Trump’s trade, which spurred moves across a range of assets following Donald Trump’s whitewash victory last week.

The token is up more than 30% since Election Day.
Initial jobless claims fell to their lowest level since May

Initial jobless claims fell by 4,000 to their lowest level since May, at 217,000 for the week ending November 9. The reading was lower than the 220,000 claims economists had expected.
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