Index Rally on Hold ahead of US Rate Decision – US Market Wrap
A rally that had propelled the world’s largest technology stocks to all-time highs stalled Thursday as Wall Street held off on big bets ahead of the Federal Reserve’s policy meeting next week.
The Nasdaq 100 dropped 0.7%, while the S&x;P 500 fell 0.5%, as traders weighed higher-than-expected jobless claims against overheated producer price data. The equity benchmarks had risen sharply the previous session after an in-line US inflation report almost fully priced in bets on a quarter-point interest rate cut at the Fed’s December 18 meeting.
Data showed that initial jobless claims increased to 242,000 for the week ended December 7th, exceeding economists’ expectations of 220,000. The November producer price readings released at the same time were mixed, with US wholesale inflation rising in November due to an increase in egg prices. Treasuries failed to hold their gains after the reading, as investors sought to predict when the central bank would pause interest-rate cuts.
The US central bank is widely expected to cut interest rates for the third time in a row next week, after the European Central Bank met expectations for a quarter-point cut and the Swiss National Bank unexpectedly reduced rates by 50 basis points.
The dollar rose 0.3% for the fifth straight session as traders anticipated a Fed pause in early 2025, while US bonds fell for the fourth day in a row. Treasuries have risen immediately following readouts this week, only to see those gains reversed. The 10-year yield rose to 4.33% on Thursday.
