Wall Street ends lower as investors await US inflation data
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[August 10, 2023] By
Echo Wang
(Reuters) - U.S. stocks closed lower on Wednesday, the day after a
report showed Americans borrowed more than ever on their credit cards in
the last quarter, and a day ahead of U.S. Consumer Price Index (CPI)
inflation data that could influence Federal Reserve interest rate
decisions.
“The markets today are just kind of waffling around. And the reason for
that is tomorrow is going to be the CPI report for July being released”,
said Jason Krupa, vice president of asset management at Lenox Advisors.
On Tuesday, the New York Federal Reserve Bank said U.S. credit cards
debt surpassed $1 trillion, and Philadelphia Fed President Patrick
Harker said the U.S. central bank may be at the stage where it can leave
interest rates unchanged.
“With price of oil going up, the consumer is the backbone of the
economy. If they are too stretched and they stopped spending, that feeds
us more into a recession narrative”, said Gina Bolvin, president of
Bolvin Wealth Management Group in Boston.
Traders put the chance of no rate hike at the Fed's next policy meeting
in September at 86.5%, according to CME FedWatch Tool. Rate-sensitive
megacap growth and technology stocks that have led the Wall Street
rally, such as Nvidia, Apple and Tesla, were down between 0.8% and 4.8%.
The CPI for July, due on Thursday, is expected to show a slight
acceleration from last year. On a month-to-month basis, consumer prices
are seen increasing 0.2%, the same as in June.
China's consumer sector fell into deflation in July. The consumer price
index (CPI) dropped in the world's second-largest economy, the National
Bureau of Statistics said, its first decline since February 2021.
The Dow Jones Industrial Average fell 191.13 points, or 0.54%, to
35,123.36, the S&P 500 lost 31.67 points, or 0.70%, to 4,467.71 and the
Nasdaq Composite dropped 165.93 points, or 1.2%, to 13,718.40.
The losses followed a broad selloff on Tuesday, after credit rating
agency Moody's downgraded several small and mid-sized banks. On
Wednesday, big banks extended those losses with Bank of America down
0.8% and Wells Fargo down 1.3%.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., July 7, 2023.
REUTERS/Brendan McDermid
Four of the top 11 S&P 500 sectors rose, with energy stocks leading
the gain by a 1.22% jump, touching a near six-month high, tracking a
jump in crude oil prices.
Casino owner Penn Entertainment's shares surged 9.1% on a $2 billion
deal with Walt Disney's ESPN to launch a sports betting business.
Walt Disney's shares dipped 0.7%, erasing early gains ahead of its
quarterly results due after the bell.
Lyft shares tumbled 10% despite a strong earnings forecast, as the
company signaled it would double down on competitive pricing to
catch up with rival Uber.
Of the 443 S&P 500 companies that have reported results as of
Tuesday, 78.6% beat analyst expectations, according to Refinitiv
data.
“It could be a little bit of that (the market is ) digesting the
fact that we're beating expectations (on earnings) but those
expectations have been coming down quarter over quarter”, said Krupa.
Volume on U.S. exchanges was 11.06 billion shares, compared with the
10.89 billion average for the full session over the last 20 trading
days.
Declining issues outnumbered advancing ones on the NYSE by a
1.18-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored decliners.
The S&P 500 posted 16 new 52-week highs and 7 new lows; the Nasdaq
Composite recorded 60 new highs and 178 new lows.
(Reporting by Echo Wang in New York, Bansari Mayur Kamdar and Johann
M Cherian in Bengaluru; Editing by Shounak Dasgupta and David
Gregorio)
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