Wall St indexes fall ahead of inflation data
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Traders working on the floor of the New York Stock Exchange, in New York City, on Dec 10.
PHOTO: REUTERS
NEW YORK - Wall Street’s main indexes closed lower on Dec 10 as investors anxiously awaited key inflation reports that could influence the Federal Reserve’s interest rate decision next week.
Among the S&P 500‘s 11 major industry sectors, communication services was the biggest boost with help from a rally in shares of Google-parent Alphabet after it unveiled a new chip.
The biggest drag was from technology, pressured by a sell-off in Oracle shares after the cloud computing company missed Wall Street estimates for second-quarter results.
Also weighing on technology was a sell-off in chips after China announced on Dec 9 an investigation into Nvidia over suspected violations of the country’s anti-monopoly law. The probe was widely seen as retaliation against Washington’s latest curbs on the Chinese chip sector.
According to preliminary data, the S&P 500 lost 16.53 points, or 0.27 per cent, to end at 6,036.32 points, while the Nasdaq Composite lost 49.45 points, or 0.25 per cent, to 19,687.24.
The Dow Jones Industrial Average fell 143.46 points, or 0.32 per cent, to 44,259.60.
A November reading of the Consumer Price Index, due on Dec 11, is among the last major reports ahead of the Fed’s Dec 17-18 meeting. Headline inflation is expected to have risen slightly in November to 2.7 per cent from 2.6 per cent in October. The Producer Price Index report will follow on Dec 12.
“There’s a little bit of wait-and-see in the market ahead of the CPI and PPI data this week,” said Ms Mona Mahajan, head of investment strategy at Edward Jones. “Markets want to see a number that won’t be too disruptive to the Fed next week.”
If the CPI comes in line with estimates, investors will expect an “all clear” for the Fed to lower rates by 25 basis points next week, she added.
Traders see an 86 per cent chance for a cut next week, CME’s FedWatch Tool showed. Bets had jumped after news on Dec 6 of an uptick in unemployment along with a rebound in job growth, which had slowed in October.
Noting the S&P 500‘s roughly 27 per cent gain for the year so far, Ms Lindsey Bell, chief strategist at 248 Ventures in Charlotte, North Carolina, said investors are cautious ahead of the economic data and Fed meeting. “We’re in a seasonally strong period of the year and investors are just kind of taking a breather,” said Ms Bell.
Market participants will be watching out for signs that the US central bank will pause its easing cycle in January, after a host of Fed officials last week hinted at a slower pace of monetary policy easing on the back of a resilient economy.
“It’s less about what the Fed does next week but what they say about the future trajectory of interest rates,” said Ms Bell.
Among individual stock movers, software firm MongoDB lost ground despite raising its forecast for annual results.
Shares in Walgreens Boots Alliance rallied after reports that it is in talks to sell itself to private equity firm Sycamore Partners.
Alaska Airlines shares rose as it raised its fourth-quarter profit forecast, while Boeing gained ground after Reuters reported the planemaker restarted production of its 737 Max jets last week.
Luxury homebuilder Toll Brothers shares fell after its quarterly results beat expectations but its current quarter forecasts disappointed. REUTERS
