Wall Street falls on interest rate concerns ahead of next U.S. inflation update – KVEO-TV

ELAINE KURTENBACH and MATT OTT, Associated Press

46 minutes ago

FILE – People pass the New York Stock Exchange on May 28, 2024 in New York City. Shares in Europe opened higher on Thursday, May 30, 2024, following a retreat in Asia. US futures fell and oil prices fell. (AP Photo/Peter Morgan, file)

Wall Street stumbled again early Thursday morning as interest rate cut hopes slowly fade and the Federal Reserve appears resolute in its mission to curb inflation.

S&P 500 futures fell 0.4% before the bell, while Dow Jones Industrial Average futures fell 0.9%.

There was little economic data this week to distract investors from Fed officials’ recent hawkish comments on interest rates and inflation, at least until Friday, when the U.S. consumer spending report is released. The report includes the Fed’s preferred measure of inflation, and investors hope it shows that inflation has retreated closer to the Fed’s 2% target.

Persistent inflation has thwarted clearly over-optimistic forecasts of several interest rate cuts this year.

“Global inflation appears to be hotter and stiffer than expected, taking the air out of asset markets,” Mizuho Bank said. “In other words, Goldilocks is falling apart. And concerns about the adverse impact of higher rates on demand.”

Lower interest rates could drive equity markets. Until there is more reason to believe a rate cut is imminent, anxiety on Wall Street is likely to remain elevated.

Rising bond yields have also weighed on markets this week, although they settled slightly lower early Thursday. The yield on 10-year bonds fell to 4.59% from 4.62% late Wednesday, while the yield on 2-year bonds fell to 4.96% from 4.98%.

The Fed is trying to offset the slowing economy by keeping interest rates high enough to fully control inflation, but not so much that it leads to mass layoffs.

The Government’s latest weekly redundancy report will be published this morning.

In pre-market trading on Thursday, software maker Salesforce lost more than 15% after reporting first-quarter sales that fell short of Wall Street expectations. Business communications software maker Slack also issued sparse guidance for the second quarter.

Apparel retailer Kohl’s is in for a shock after it surprised investors with a first-quarter loss of 24 cents per share when investors expected a profit of 5 cents per share. The company’s shares fell more than 22% after it missed sales targets and cut guidance.

Computer and printer maker HP jumped 5.8% after a strong earnings report, while clothing retailer American Eagle Outfitters fell 8.5% after missing sales targets in the latest quarter.

In Europe, the Paris CAC 40 rose 0.2%, while the British FTSE gained 0.4%. The German DAX remained largely unchanged.

Asian shares were lower on Wall Street on Wednesday, with Tokyo’s benchmark Nikkei 225 closing down 1.3% at 38,054.13.

Hong Kong’s Hang Seng fell 1.3% to 18,230.19.

The Shanghai Composite Index gave up early gains, losing 0.6% to 3,091.68.

Australia’s S&P/ASX 200 index fell 0.5% to 7,628.20, while Seoul’s Kospi fell 1.6% to 2,635.44.

Taiwan’s Taiex lost 1.4% and India’s Sensex fell 0.7%.

In the energy market, benchmark U.S. crude oil was steady at $79.23 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, fell 10 cents to $83.33 a barrel.

The U.S. dollar fell to 156.73 Japanese yen from 157.65 yen. The euro rose to $1.0819 from $1.0803.

The S&P 500 index fell 0.7% on Wednesday, limiting gains for May, which was expected to be the best month since November. Four of the five companies included in the index lost value.

The Dow industrials lost 1.1% and the Nasdaq fell 0.6%.