Stocks fall ahead of a key inflation report – US Market Wrap
Daily Dose, US

Stocks fall ahead of a key inflation report – US Market Wrap

Wall Street traders looking for key inflation data sifted through mixed economic data and remarks from Federal Reserve speakers for clues on the interest-rate outlook.

Equities fell slightly after a report showed that the US economy grew at a slower rate at the end of last year, as a downward revision to inventories obscured stronger household spending and investment. The data, deemed “uneventful” by many investors, was released just 24 hours before the Fed’s preferred inflation gauge.

Following a rise in both the consumer and producer price indexes, Thursday’s core personal consumption expenditures gauge will likely highlight the central bank’s bumpy path to meeting its 2% target. The PCE is seen as validating recent comments from officials that there is no rush to ease monetary policy.

The S&P 500 dropped to around 5,070. Nvidia’s decline from a record high has continued. Apple fell, but remained above its $180 technical support. Tesla has risen. UnitedHealth Group fell on reports that the US Department of Justice had launched an antitrust investigation. Bitcoin surpassed $60,000 in a rally driven primarily by the launch of US exchange-traded funds holding the token this year. Treasury 10-year yields fell four basis points, to 4.26%.

Three Fed officials stated that the pace of rate cuts will be determined by incoming economic data.
Boston Fed President Susan Collins and New York’s John Williams expect the first rate cut “later this year,” while Atlanta’s Raphael Bostic anticipates a cut this summer.

Traders are currently pricing in about 80 basis points of easing by the end of the year, which is nearly identical to what officials predicted in December. That would equate to three cuts in 2024, as the Fed has historically moved in 25 basis point increments. To put things into perspective, swaps were projecting nearly 150 basis points of cuts this year at the beginning of February.