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S&P 500, Nasdaq snap losing streaks after jobless claims rise

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  • Weekly jobless claims rise in line with estimates
  • Moderna, Pfizer up as FDA authorizes updated COVID boosters
  • Exxon climbs after boosting buyback program
  • Indexes up: Dow 0.55%, S&P 0.75%, Nasdaq 1.13%

Dec 8 (Reuters) – The S&P 500 (.SPX) ended higher on Thursday, snapping a five-session losing streak, as investors interpreted data showing a rise in weekly jobless claims as a sign the pace of interest rate hikes could soon slow.

Wall Street’s main indexes had come under pressure in recent days, with the S&P 500 shedding 3.6% since the beginning of December on expectations of a longer rate-hike cycle and downbeat economic views from some top company executives.

Such thinking had also weighed on the Nasdaq Composite (.IXIC), which had posted four straight losing sessions prior to Thursday’s advance on the tech-heavy index.

Stocks rose as investors cheered data showing the number of Americans filing claims for jobless benefits increased moderately last week, while unemployment rolls hit a 10-month high toward the end of November.

The report follows data last Friday that showed U.S. employers hired more workers than expected in November and increased wages, spurring fears that the Fed might stick to its aggressive stance to tame decades-high inflation.

Markets have been swayed by data releases in recent days, with investors lacking certainty ahead of Federal Reserve guidance next week on interest rates.

Such behavior means Friday’s producer price index and the University of Michigan’s consumer sentiment survey will likely dictate whether Wall Street can build on Thursday’s rally.

“The market has to adjust to the fact that we’re moving from a stimulus-based economy – both fiscal and monetary – into a fundamentals-based economy, and that’s what we’re grappling with right now,” said Wiley Angell, chief market strategist at Ziegler Capital Management.

The Dow Jones Industrial Average (.DJI) rose 183.56 points, or 0.55%, to close at 33,781.48; the S&P 500 (.SPX) gained 29.59 points, or 0.75%, to finish at 3,963.51; and the Nasdaq Composite (.IXIC) added 123.45 points, or 1.13%, at 11,082.00.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 7, 2022. REUTERS/Brendan McDermid

Nine of the 11 major S&P 500 sectors rose, led by a 1.6% gain in technology stocks (.SPLRCT).

Most mega-cap technology and growth stocks gained. Apple Inc (AAPL.O), Nvidia Corp (NVDA.O) and Amazon.com Inc (AMZN.O) rose between 1.2% and 6.5%.

Microsoft Corp (MSFT.O) ended 1.2% higher, despite giving up some intraday gains after the Federal Trade Commission filed a complaint aimed at blocking the tech giant’s $69 billion bid to buy Activision Blizzard Inc . The “Call of Duty” games maker closed 1.5% lower.

The energy index (.SPNY) was an exception, slipping 0.5%, despite Exxon Mobil Corp (XOM.N) gaining 0.7% after announcing it would expand its $30-billion share repurchase program. The sector had been under pressure in recent sessions as commodity prices slipped: U.S. crude is now hovering near its level at the start of 2022.

Meanwhile, Moderna Inc (MRNA.O) advanced 3.2% after the U.S. Food and Drug Administration authorized COVID-19 shots from the vaccine maker that target both the original coronavirus and Omicron sub-variants for use in children as young as six months old.

The regulator also approved similar guidance for fellow COVID vaccine maker Pfizer Inc (PFE.N), which rose 3.1%, and its partner BioNTech, whose U.S.-listed shares gained 5.6%.

Rent the Runway Inc (RENT.O) posted its biggest ever one-day gain, jumping 74.3%, after the clothing rental firm raised its 2022 revenue forecast.

Volume on U.S. exchanges was 10.07 billion shares, compared with the 10.90 billion average for the full session over the last 20 trading days.

The S&P 500 posted 15 new 52-week highs and three new lows; the Nasdaq Composite recorded 82 new highs and 232 new lows.

Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Sriraj Kalluvila, Anil D’Silva and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Business

S&P, Nasdaq extend losing streaks amid rising recession worries

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  • Apple down after Morgan Stanley cuts Dec shipment target
  • Tesla falls on production loss worries
  • Carvana records worst-ever daily drop
  • Indexes: Dow flat, S&P down 0.19%, Nasdaq 0.51%

Dec 7 (Reuters) – The S&P 500 and Nasdaq closed down on Wednesday after a choppy session on Wall Street, as investors struggled to grasp a clear direction as they weighed how the Federal Reserve’s monetary policy tightening might feed through into corporate America.

For the benchmark S&P 500 (.SPX), it was the fifth straight session that it has declined, while the Nasdaq (.IXIC) finished down for the fourth time in a row. The Dow snapped a two-session losing streak, as it ended unchanged from the previous day.

The Nasdaq was dragged down by a 1.4% drop in Apple Inc (AAPL.O) on Morgan Stanley’s iPhone shipment target cut and a 3.2% fall in Tesla Inc (.IXIC) over production loss worries.

Markets have also been rattled by downbeat comments from top executives at Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) on Tuesday that a mild to more pronounced recession was likely ahead.

Fears that the U.S. central bank might stick to a longer rate-hike cycle have intensified recently in the wake of strong jobs and service-sector reports.

More economic data, including weekly jobless claims, producer price index and the University of Michigan’s consumer sentiment survey this week, will be on the watch list for clues on what to expect from the Fed on Dec. 14.

“It feels like we’re in this very uncertain period where investors are trying to ascertain what’s more important, as policymakers are slowing down on rates but the data is not playing ball,” said Craig Erlam, senior market analyst at OANDA.

“The market is trying to balance the headwinds and the tailwinds and this is causing some confusion.”

The CBOE volatility index (.VIX), also known as Wall Street’s fear gauge, closed at 22.68, its highest finish since Nov. 18.

[1/2] Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2022. REUTERS/Brendan McDermid

Money market participants see a 91% chance that the Fed will increase its key benchmark rate by 50 basis points in December to 4.25%-4.50%, with rates peaking in May 2023 at 4.93%.

The S&P 500 (.SPX) lost 7.34 points, or 0.19%, to close at 3,933.92 and the Nasdaq Composite (.IXIC) dropped 56.34 points, or 0.51%, to finish at 10,958.55. The Dow Jones Industrial Average (.DJI) was flat, ending on 33,597.92.

Concerns about a steep rise in borrowing costs have boosted the dollar, but dented demand for risk assets such as equities this year. The S&P 500 is on track to snap a three-year winning streak.

Three of the 11 major S&P sector indexes were higher, with healthcare (.SPXHC) one of them. Technology (.SPLRCT) and communication services (.SPLRCL), down 0.5 and 0.9% respectively, were the worst performers.

Energy (.SPNY) fell for its fifth straight session. The sector’s performance was weighed by U.S. crude prices falling again, settling at the lowest level in 2022, as concerns over the outlook for global growth wiped out all of the gains since Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades.

Carvana Co (CVNA.N) had its worst day as a public company, losing nearly half its stock value, after Wedbush downgraded the used-car retailer’s stock to “underperform” from “neutral” and slashed its price target to $1.

Meanwhile, United Airlines (UAL.O) traded 4.1% lower. Unions representing various workers at the airline said they would join forces on contract negotiations.

Travel-related stocks were generally down. Delta Air Lines (DAL.N) and American Airlines Group (AAL.O) were 4.4% and 5.4% lower respectively, with cruise line operators Carnival Corp (CCL.N) and Norwegian Cruise Line Holdings (NCLH.N) and accommodation-linked Airbnb Inc (ABNB.O) and Booking Holdings (BKNG.O) all falling between 1.7% and 4.4%.

Volume on U.S. exchanges was 10.29 billion shares, compared with the 10.98 billion average for the full session over the last 20 trading days.

The S&P 500 posted seven new 52-week highs and seven new lows; the Nasdaq Composite recorded 61 new highs and 307 new lows.

Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian and Shashwat Chauhan in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker

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Business

Stocks slide, dollar steady as market gauges Fed’s rate policy

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NEW YORK/LONDON, Dec 6 (Reuters) – Global stocks headed for a third straight day of losses on Tuesday and the dollar held steady as the market assesses how long the Federal Reserve keeps interest rates higher and the likelihood that policy provokes a recession.

U.S. stocks followed European shares lower, with all sectors in the red, with the exception of the defensive utilities sector (.SPLRCU), which seesawed between gains and losses.

MSCI’s U.S.-centric all-country world index (.MIWD00000PUS) fell 1.06%, on track for a third session in a row of declines after hitting a three-month high last week.

Treasury yields fell, but more at the long end of maturities than the short end, which deepened the inverted yield curve, a market indicator of a looming recession. The gap between yields on two- and 10-year notes was -82.6 basis points.

The market needs to recognize that a recession most likely is a reality, not just a hypothetical, and that valuations need to go lower, said Jason Pride, chief investment officer of private wealth at Glenmede in Philadelphia.

“During recessions, markets on average price at a discount to fair value, which they have not yet done,” Pride said. “There is not a single instance in which a market has bottomed before the recession started.”

Data released on Monday showing U.S. services industry activity unexpectedly picked up in November and last week’s robust U.S. payrolls report have raised doubts about how soon the Fed would ease monetary policy from being restrictive.

Futures show the market expects the Fed’s peak terminal rate to rise to 4.9951% next May, but by December 2023 to have declined to 4.565% on speculation the Fed will cut rates to help the economy rebound from an expected slowdown in growth.

Wall Street was dragged lower by banking shares and Meta Platforms Inc (META.O), after European Union regulators ruled its Facebook and Instagram units should not require users to agree to personalized ads based on their digital activity.

The Dow Jones Industrial Average (.DJI) fell 0.79%, the S&P 500 (.SPX) slid 1.19% and the Nasdaq Composite (.IXIC) dropped 1.57%. In Europe, the STOXX 600 index (.STOXX) lost 0.56%.

The dollar was mostly unchanged against the euro and yen after strong gains on Monday, with investors awaiting next week’s expected 50 basis points rate hike by the Fed.

The euro rose 0.24% to $1.0516, while the yen strengthened 0.22% at 136.44 per dollar.

Euro zone government bond yields fell after two European Central Bank officials signaled inflation and rates may be close to peaking in the run-up to a raft of major central bank decisions.

The ECB, the Bank of England and the Fed all meet next week to discuss monetary policy. The Reserve Bank of Australia offered a glimpse of decisions to come after raising interest rates to decade highs and sticking with a prediction of more hikes ahead.

All eyes will be on the release next Tuesday of November’s U.S. consumer price index data, which will provide insight into the pace of inflation.

The yield on U.S. 10-year notes fell 4.2 basis points to 3.557%.

Oil prices fell in a volatile market as the dollar stayed strong and economic uncertainty offset the bullish impact of a price cap placed on Russian oil and the prospects of a demand boost in China.

On Monday, crude futures recorded their biggest daily drop in two weeks.

U.S. crude fell 2.24% to $75.21 a barrel and Brent was at $80.70, down 2.39% on the day.

Spot gold added 0.3% to $1,774.09 an ounce.

Reuters Graphics

Reporting by Herbert Lash, additional reporting by Anshuman Daga in Singapore and Alun John in London; Editing by Simon Cameron-Moore, Angus MacSwan and Jonathan Oatis

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Business

Wall St slides as services data spooks investors about Fed rate hikes

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  • U.S. service sector activity picks up in November
  • Tesla cuts output plan for Shanghai plant for December-sources
  • All S&P 500 sectors decline, with energy stocks hit hard
  • Indexes down: Dow 1.4%, S&P 1.79%, Nasdaq 1.93%

Dec 5 (Reuters) – U.S. markets ended Monday lower, as investors spooked by better-than-expected data from the services sector re-evaluated whether the Federal Reserve could hike interest rates for longer, while shares of Tesla slid on reports of a production cut in China.

The electric-vehicle maker (TSLA.O) slumped 6.4% on plans to cut December output of the Model Y at its Shanghai plant by more than 20% from the previous month.

This weighed on the Nasdaq, where Tesla was one of the biggest fallers, pulling the tech-heavy index to its second straight decline.

Broadly, indexes suffered as data showed U.S. services industry activity unexpectedly picked up in November, with employment rebounding, offering more evidence of underlying momentum in the economy.

The data came on the heels of a survey last week that showed stronger-than-expected job and wage growth in November, challenging hopes that the Fed might slow the pace and intensity of its rate hikes amid recent signs of ebbing inflation.

“Today is a bit of a response to Friday, because that jobs report, showing the economy was not slowing down that much, was contrary to the message which (Chair Jerome) Powell had delivered on Wednesday afternoon,” said Bernard Drury, CEO of Drury Capital, referencing comments made by the head of the Federal Reserve saying it was time to slow the pace of coming interest rate hikes.

“We’re back to inflation-fighting mode,” Drury added.

Investors see an 89% chance that the U.S. central bank will increase interest rates by 50 basis points next week to 4.25%-4.50%, with the rates peaking at 4.984% in May 2023.

The rate-setting Federal Open Market Committee meets on Dec. 13-14, the final meeting in a volatile year, which saw the central bank attempt to arrest a multi-decade rise in inflation with record interest rate hikes.

“Stock Exchange” is seen over an entrance to the New York Stock Exchange (NYSE) on Wall St. in New York City, U.S., March 29, 2021. REUTERS/Brendan McDermid/File Photo

The aggressive policy tightening has also triggered worries of an economic downturn, with JPMorgan, Citigroup and BlackRock among those that believe a recession is likely in 2023.

The Dow Jones Industrial Average (.DJI) fell 482.78 points, or 1.4%, to close at 33,947.1, the S&P 500 (.SPX) lost 72.86 points, or 1.79%, to end on 3,998.84, and the Nasdaq Composite (.IXIC) dropped 221.56 points, or 1.93%, to finish on 11,239.94.

In other economic data this week, investors will also monitor weekly jobless claims, producer prices and the University of Michigan’s consumer sentiment survey for more clues on the health of the U.S. economy.

Energy (.SPNY) was among the biggest S&P sectoral losers, dropping 2.9%. It was weighed by U.S. natural gas futures slumping more than 10% on Monday, as the outlook dimmed due to forecasts for milder weather and the delayed restart of the Freeport liquefied natural gas (LNG) export plant.

EQT Corp (EQT.N), one of the largest U.S. natural gas producers, was the steepest faller on the energy index, closing 7.2% lower.

Financials (.SPSY) were also hit hard, slipping 2.5%. Although bank profits are typically boosted by rising interest rates, they are also sensitive to concerns about bad loans or slowing loan growth amid an economic downturn.

Meanwhile, apparel maker VF Corp (VFC.N) dropped 11.2% – its largest one-day decline since March 2020 – after announcing the sudden retirement of CEO Steve Rendle. The firm, which owns names including outdoor wear brand The North Face and sneaker maker Vans, also cut its full-year sales and profit forecasts, blaming weaker-than-anticipated consumer demand.

Volume on U.S. exchanges was 10.78 billion shares, compared with the 11.04 billion average for the full session over the last 20 trading days.

The S&P 500 posted six new 52-week highs and four new lows; the Nasdaq Composite recorded 105 new highs and 133 new lows.

Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian and Devik Jain in Bengaluru and David French in New York; Editing by Anil D’Silva, Shounak Dasgupta and Lisa Shumaker

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Business

S&P 500 ends slightly lower after jobs report

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  • Job growth beats expectations
  • Unemployment rate steady at 3.7%
  • Ford falls on lower November vehicle sales
  • Dow up 0.1%, S&P 500 down 0.12%, Nasdaq down 0.18%

NEW YORK, Dec 2 (Reuters) – The S&P 500 closed slightly lower on Friday, although major indexes rallied off their worst levels of the day, as the November payrolls report fueled expectations the Federal Reserve would maintain its path of interest rate hikes to combat inflation.

The Labor Department’s jobs report showed nonfarm payrolls rose by 263,000, above expectations of 200,000 and wage growth accelerated even as recession concerns increase.

The U.S. unemployment rate remained unchanged, as expected, at 3.7%.

“Wage growth has been in an uptrend since August,” said Brian Jacobsen, senior investment strategist at Allspring Global Investment in Menomonee Falls, Wisconsin.

“We will have to see that trend reverse for the Fed to be comfortable with a pause. Until then, they’ll continue to taper towards a pause.”

Investors have been looking for signs of weakness in the labor market, especially wages, as a precursor to faster cooling of inflation that will enable the Fed to slow and eventually stop its current rate hike cycle.

Stocks had rallied earlier in the week after Fed Chair Jerome Powell’s comments on scaling back interest rates hikes as early as December.

The Dow Jones Industrial Average (.DJI) rose 34.87 points, or 0.1%, to 34,429.88, the S&P 500 (.SPX) lost 4.87 points, or 0.12%, to 4,071.7 and the Nasdaq Composite (.IXIC) dropped 20.95 points, or 0.18%, to 11,461.50.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 21, 2022. REUTERS/Brendan McDermid

Still, equities ended the session off their lowest levels of the day that saw each of the major indexes tumble at least 1%, with the Dow managing a slight gain.

“If anything, I am actually encouraged by how the market is clawing its way back from the level we were at today. It is another indication the market is looking for at least a seasonal December rally,” said Sam Stovall, chief investment strategist at CFRA in New York.

“The market is beginning to look across the valley and say, ‘OK, a year from now the Fed will likely be on hold and considering cutting rates.'”

The rate-setting Federal Open Market Committee meets on Dec. 13-14, the final meeting in a volatile year that saw the central bank attempt to stifle the fastest rate of inflation since the 1980s with record interest rates increases.

The major averages notched a second straight week of gains, with the S&P 500 climbing 1.13%, the Dow gaining 0.24% and the Nasdaq rising 2.1%.

Growth and technology companies such as Apple Inc (AAPL.O), down 0.34%, and Amazon (AMZN.O), off 1.43%, were pressured by concerns over rising rates but pared declines as U.S. Treasury yields eased throughout the day off earlier highs. The S&P 500 growth index (.IGX) declined 0.29% while technology shares (.SPLRCT) were among the worst performing among the 11 major S&P 500 sectors with a fall of 0.55%.

Ford Motor Co (F.N) declined 1.56% on lower vehicle sales in November, while DoorDash Inc (DASH.N) 3.38% shed after RBC downgraded the food delivery firm’s stock.

Advancing issues outnumbered declining ones on the NYSE by a 1.15-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancers.

The S&P 500 posted 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 86 new highs and 92 new lows.

Reporting by Chuck Mikolajczak; Editing by Cynthia Osterman

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Business

U.S. labor market shrugs off recession fears; keeps Fed on tightening path

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  • Nonfarm payrolls increase 263,000 in November
  • Unemployment rate steady at 3.7%; participation rate falls
  • Average hourly earnings rise 0.6%; up 5.1% year-on-year

WASHINGTON, Dec 2 (Reuters) – U.S. employers hired more workers than expected in November and increased wages, shrugging off mounting worries of a recession, but that will probably not stop the Federal Reserve from slowing the pace of its interest rate hikes starting this month.

Despite the strong job growth, some details of the Labor Department’s closely watched employment report on Friday were a bit weak, which economists said could be flagging upcoming labor market weakness. Household employment decreased for a second straight month. About 186,000 people left the labor force, keeping the unemployment rate unchanged at 3.7%.

Labor market tightness and strength keeps the Fed on its monetary policy tightening path at least through the first half of 2023, and could raise its policy rate to a higher level where it could stay for sometime. It also underscores the economy’s resilience heading into was is expected to be a tough year.

“November’s labor market report was clearly bad news for the Fed’s war on inflation,” said Jan Groen, chief U.S. macro strategist at TD Securities in New York. “The Fed has no other choice than to remain in tightening mode for the near future, with 50 basis points hikes in December and February.”

Nonfarm payrolls increased by 263,000 jobs last month. Data for October was revised higher to show payrolls rising 284,000 instead of 261,000 as previously reported. Monthly job growth of 100,000 is needed to keep pace with growth in the labor force.

Economists polled by Reuters had forecast payrolls increasing 200,000. Estimates ranged from 133,000 to 270,000. Employment growth has averaged 392,000 per month this year compared with 562,000 in 2021.

Hiring remains strong despite announcements of thousands of job cuts by technology companies, including Twitter, Amazon (AMZN.O) and Meta (META.O), the parent of Facebook.

Economists say these companies are right-sizing after over-hiring during the COVID-19 pandemic, noting that small firms remain desperate for workers.

There were 10.3 million job openings at the end of October, with 1.7 openings for every unemployed person, many of them in the leisure and hospitality as well as healthcare and social assistance industries.

The gains in employment last month were led by the leisure and hospitality sector, which added 88,000 jobs, most of them at restaurants and bars. Leisure and hospitality employment remains down 980,000 from its pre-pandemic level.

There were 45,000 jobs added in healthcare, while government payrolls increased 42,000. Construction employment increased by 20,000 jobs despite the housing market turmoil, while manufacturing added 14,000 jobs.

But retail trade employment fell by 30,000 jobs, with most of the losses in general merchandise stores. Transportation and warehousing payrolls decreased by 15,000 jobs. Temporary help jobs, a segment normally considered a harbinger of future hiring, decreased by 17,200.

“The labor market might encounter some bumps in the road next year, but it’s heading into 2023 cruising,” said Nick Bunker, head of economic research at the Indeed Hiring Lab.

Fed Chair Jerome Powell said on Wednesday the U.S. central bank could scale back the pace of its rate hikes “as soon as December.” The Fed has raised its policy rate by 375 basis points this year from near zero to a 3.75%-4.00% range in the fastest rate-hiking cycle since the 1980s.

Policymakers meet on Dec. 13 and 14. Attention now shifts to November’s consumer price data due on Dec. 13.

Stocks on Wall Street fell. The dollar rose against a basket of currencies. U.S. Treasury prices were lower.

WAGES ACCELERATE

With the labor market still tight, average hourly earnings increased 0.6% after advancing 0.5% in October. That raised the annual increase in wages to 5.1% from 4.9% in October. Wage growth peaked at 5.6% in March.

Reuters Graphics Reuters Graphics

The broad wage gains suggest that the moderation in inflation, evident in October data, will be gradual. Economists said this also raised concerns about a wage-price spiral that could keep service prices rising outside the shelter component. Fed officials have shied away from calling a price-wage spiral.

“The broad-based nature of the increase and its consistency with other data on wages makes us think that around 5% average hourly earnings growth is not an aberration,” said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.

Strong wage gains are helping to drive consumer spending, which surged in October, leading economists to believe that an anticipated recession next year would be short and shallow. But there are some signs of weakness emerging in the labor market.

Household employment decreased by 138,000 jobs, the second straight monthly decline. Though household employment tends to be volatile as it is drawn from a smaller sample compared to nonfarm payrolls, economists said the divergence between these two measures was important to watch.

“The household survey may be better in capturing turning points in the labor market than the payroll survey, since the payroll survey is unable to adequately capture activity in opening and closing firms while the household survey can,” said Sophia Koropeckyj, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Others, however, argued nonfarm payrolls were a better gauge and expected household employment to converge with payrolls.

The participation rate, or the proportion of working-age Americans who have a job or are looking for one, slipped to 62.1% from 62.2% in October. Some of the decrease in household employment and participation was likely because of illness, with 1.6 million people saying they were absent from work because they were sick, up 265,000 from October.

The participation rate for Americans 55 years and older fell, possibly reflecting retirements. The employment-to-population ratio dipped to 59.9% from 60.0% in October.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.

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Business

Wall Street ends mixed; Salesforce selloff pressures Dow

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  • Salesforce drops on co-CEO exit plan
  • Dollar General falls on slashing annual profit view
  • U.S. manufacturing shrinks for first time in 2-1/2 years in Nov

Dec 1 (Reuters) – Wall Street ended mixed on Thursday as a selloff in Salesforce weighed on the Dow, while traders digested U.S. data that suggested the Federal Reserve’s interest rate hikes are working.

On Wednesday, the S&P 500 surged over 3% on optimism the Fed might moderate its campaign of interest rate hikes.

U.S. manufacturing activity shrank in November for the first time in 2-1/2 years as higher borrowing costs weighed on demand for goods, data showed, evidence the Fed’s rate hikes have cooled the economy.

The personal consumption expenditures (PCE) price index rose 0.3%, the same as in September, and over the 12 months through October the index increased 6.0% after advancing 6.3% the prior month.

Excluding the volatile food and energy components, the PCE price index rose 0.2%, one-tenth less than expected, after gaining 0.5% in September.

“On a normal day, the package of data this morning would be pretty risk-on, but after the rally yesterday, I think it’s not quite good enough to push another leg higher,” said Ross Mayfield, an investment strategy analyst at Baird.
Wednesday’s rally drove the S&P 500 index (.SPX) above its 200-day moving average for the first time since April after Fed Chair Jerome Powell said it was time to slow the pace of interest rate hikes.

Traders now see a 79% chance the Fed will increase its key benchmark rate by 50 basis points in December and a 21% chance it will hike rates by 75 basis points.

Salesforce Inc (CRM.N) tumbled after the software maker said Bret Taylor would step down as co-chief executive officer in January.

Dollar General Corp (DG.N) fell after the discount retailer cut its annual profit forecast, while Costco Wholesale Corp (COST.O) dropped after the membership-only retail chain reported slower sales growth in November.

According to preliminary data, the S&P 500 (.SPX) lost 2.31 points, or 0.06%, to end at 4,077.80 points, while the Nasdaq Composite (.IXIC) gained 15.22 points, or 0.13%, to 11,483.21. The Dow Jones Industrial Average (.DJI) fell 193.24 points, or 0.56%, to 34,397.42.

A report from the Labor Department on Thursday showed initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 225,000 for the week ended Nov. 26.

Investors now await nonfarm payrolls data on Friday for clues about how rate hikes have affected the labor market.

With a month left in 2022, the S&P 500 is down about 14% year to date, and the Nasdaq has lost about 27%.

Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Shounak Dasgupta and David Gregorio

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U.S. to boost spending on tribal lands, protect Nevada sacred site

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WASHINGTON, Nov 30 (Reuters) – The Biden administration will give Native American tribes more say in managing federal and tribal lands as part of a plan that includes assistance for tribes whose land has been harmed by climate change, the White House said on Wednesday.

President Joe Biden and other Cabinet officials announced the measures at a two-day Tribal Nations Summit, with additional steps focused on providing better access to capital for tribal nations.

Biden also said at the summit that he intends to protect the area surrounding Spirit Mountain in Nevada, known as Avi Kwa Ame to the Fort Mojave tribe, which has been urging the United States to designate the huge swath of land as a national monument.

“I’m committed to protecting this sacred place that is central to the creation story of so many tribes that are here today,” Biden announced during remarks at Tribal Nations summit in Washington.

Biden was met by applause when he commented that he intends to visit tribal lands while in office.

Among the other new actions announced by the administration are efforts to boost purchases of tribal energy and other goods and services, and to revitalize Native languages.

The three signature pieces of legislation passed during Biden’s time in office – laws dealing with infrastructure, climate and COVID-19 relief – have provided nearly $46 billion in funding for tribal communities and Native American people, the White House said.

The actions include new uniform standards for how federal agencies should consult Native American tribes in major decisions that affect their sovereignty, the creation of a new office of partnerships to advance economic development and conservation initiatives and agreements promoting the co-stewardship of federal lands, waters, fisheries and other resources of significance and value to tribes.

“I made a commitment my administration would prioritize and respect nation-to-nation relationships,” Biden said. “I hope our work in the past two years has demonstrated that we’re meeting that commitment.”

The Interior Department also announced it would award $115 million to 11 tribes that have been severely impacted by climate-related environmental threats, and $25 million each to two Alaska tribes and the Quinault Nation in Washington state to help them execute their plans to relocate their villages to safer ground.

Federal agencies will also be instructed to recognize and include indigenous knowledge in federal research, policy, and decision-making, by elevating tribal “observations, oral and written knowledge, practices, and beliefs” that promote environmental sustainability.

The Small Business Administration will announce plans to boost access to financing opportunities, while the Energy Department plans to increase federal agencies’ use of tribal energy through purchasing authority established under a 2005 law unused for more than 17 years.

The administration will also work to deploy electric-vehicle infrastructure in tribal lands, prioritize the replacement of diesel school buses with low or zero emission school buses, and help tribes buy or lease EV fleet vehicles.

As part of that drive, the Interior Department will set a goal to award 75% of contract dollars from Indian Affairs agencies and 10% of the department’s remaining contract dollars to Native-owned businesses. Along with a new Indian Health Service goal of 20% of purchases, the actions could redirect hundreds of millions of dollars to businesses on tribal lands.

The government will also release a draft of a 10-year plan to revitalize Native American languages and which underscores the urgency for immediate action, while formally recognizing the role that the U.S. government played in erasing Native languages.

The administration also announced a new initiative that will aim to widely deploy broadband and other wireless services on tribal lands, helping Native American tribes improve communication services that have lagged those of non-tribal lands.

Reporting by Andrea Shalal, Valerie Volcovici and Jeff Mason in Washington
Additional reporting by Katharine Jackson in Washington
Editing by Robert Birsel and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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Business

Shares rise, U.S. Treasury yields drop ahead of Fed minutes’ release

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  • Fed minutes for November due at 1900 GMT
  • Wall Street stocks trade higher
  • U.S. Treasury yields retreat
  • Crude prices drop more than 4%
  • U.S. dollar falls

NEW YORK, Nov 23 (Reuters) – World equities rose while U.S. Treasury yields were lower ahead of the release of the Federal Reserve’s meeting minutes that would offer a glimpse on whether officials are likely to soften their stiff monetary policy stance.

Traders are expecting the minutes, which will be published on Wednesday, to provide clues that the Fed is set to end its pace of sharp interest rate hikes in response to a moderation in economic conditions.

Labor Department data showed on Wednesday that U.S. jobless claims increased more than expected last week while U.S. business activity contracted for a fifth month in November, according to the S&P Global flash U.S. Composite PMI Output Index.

“What investors are hoping for is that the Fed acknowledges that since the consumer price index looks like it might be peaking that there’s going to be some language that they see a pause on the near-term horizon,” said Jordan Kahn, chief investment officer at ACM Funds in Los Angeles, California.

The MSCI All Country stock index (.MIWD00000PUS) was up 0.8%, while European shares (.STOXX) rose 0.62%.

U.S. Treasury yields were trading lower. Benchmark 10-year notes were down to 3.7242% while the yields on two-year notes dropped to 4.4835%.

The yield curve that compares these two bonds widened further into negative territory, to -76.30 basis points. When inverted, that part of the curve is seen as an indicator of an upcoming recession.

“I tend to think that investors that are looking for any sought of hint of a pause are going to be disappointed. I think the Fed is going to keep the message they’ve been saying for a while, which is that their job isn’t done yet and need to bring down demand,” Kahn said.

“The yield curve is still screaming that the economy is on the precipice of a slowdown,” he added.

On Wall Street, all three major indexes were trading higher, led by gains in technology, consumer discretionary, communication, and industrial stocks.

The Dow Jones Industrial Average (.DJI) rose 0.29% to 34,196.78, the S&P 500 (.SPX) gained 0.56% to 4,025.81 and the Nasdaq Composite (.IXIC) added 0.96% to 11,282.14.

Oil prices fell more than 4% as the Group of Seven (G7) nations looked at a price cap on Russian oil that is above where it is currently trading and as gasoline inventories in the United States built more than analysts expected.

Brent futures for January delivery fell 4.2% to $84.65 a barrel, while U.S. crude fell 4.46%, to $77.34 per barrel.

The U.S. dollar fell across the board ahead of the release of the Fed’s minutes and new data showing weaker economic conditions. The dollar index fell 0.7%, with the euro up 0.62% to $1.0366.

Gold prices were choppy as the U.S. dollar fell. Spot gold added 0.1% to $1,742.66 an ounce, while U.S. gold futures fell 0.10% to $1,736.50 an ounce.

Reporting by Chibuike Oguh in New York
Editing by Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

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World

Beijing shuts parks, Shanghai tightens entry as China COVID cases rise

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  • China COVID infection numbers near April peaks
  • Beijing widens shutdown of public venues
  • Guangzhou, Chongqing account for largest infection numbers
  • Shanghai tightens rules for recent arrivals after 48 new cases

BEIJING, Nov 22 (Reuters) – Beijing shut parks and museums on Tuesday and Shanghai tightened rules for people entering the city as Chinese authorities grapple with a spike in COVID-19 cases that has deepened concern about the economy and dimmed hopes for a quick reopening.

China reported 28,127 new domestically transmitted cases for Monday, nearing its daily peak from April, with infections in the southern city of Guangzhou and the southwestern municipality of Chongqing accounting for about half the total.

In Beijing, cases have been hitting new highs every day, prompting calls from the city government for more residents to stay put and show proof of a negative COVID test, not more than 48 hours old, to get into public buildings.

Late on Tuesday, financial hub Shanghai announced that from Thursday people may not enter venues such as shopping malls and restaurants within five days of arriving in the city, although they can still go to offices and use transport. Earlier, the city of 25 million people ordered the closure of cultural and entertainment venues in seven of its 16 districts after reporting 48 new local infections.

The wave of infections is testing recent adjustments China has made to its zero-COVID policy, aimed at making authorities more targeted in clampdown measures and steering them away from blanket lockdowns and testing that have strangled the economy and frustrated residents nearly three years into the pandemic.

“Some of our friends went bankrupt, and some lost their jobs,” said a 50-year-old Beijing retiree surnamed Zhu.

“We can’t do many activities we intended to do, and it is impossible to travel. So we really hope that the pandemic can end as soon as possible,” she said.

Health authorities attributed two more deaths to COVID-19, after three over the weekend, which were China’s first since May.

Even after the adjusted guidelines, China remains a global outlier with its strict COVID restrictions, including borders that remain all-but-shut.

Tightening measures in Beijing and elsewhere, even as China tries to avoid city-wide lockdowns like the one that crippled Shanghai this year, have renewed investor worries about the world’s second-largest economy, weighing on stocks and prompting analysts to cut forecasts for China’s year-end oil demand.

Brokerage Nomura said its in-house index estimated that localities accounting for about 19.9% of China’s total gross domestic product were under some form of lockdown or curbs, up from 15.6% last Monday and not far off the index’s peak in April, during Shanghai’s lockdown.

The government argues that President Xi Jinping’s signature zero-COVID policy saves lives and is necessary to prevent the healthcare system becoming overwhelmed.

[1/5] A pandemic prevention worker in a protective suit keeps watch at at residential compound after it was locked down as outbreaks of coronavirus disease (COVID-19) continue in Beijing, November 18, 2022. REUTERS/Thomas Peter

But many frustrated social media users drew a comparison with maskless fans at the soccer World Cup, which began on Sunday in Qatar.

“Tens of thousands in Qatar don’t wear masks. And we are still panicking,” wrote one user on the Weibo platform.

LOCALISED LOCKDOWNS

Numerous Beijing residents have seen their buildings locked down during the recent outbreak, although those restrictions often last just a few days.

Some residents said grocery deliveries were slow because of heavy volumes while many museums were closed and venues such as the Happy Valley amusement park and the Chaoyang Park, popular with runners and picnickers, said they would shut.

Beijing reported 1,438 new domestic cases for Monday, up from 962 on Sunday, plus 634 more for the first 15 hours of Tuesday.

Chinese Vice Premier Sun Chunlan, who has spearheaded the zero-COVID policy, visited Chongqing on Monday and urged authorities to stick with the plan and bring the outbreak under control, the municipality said.

NOT AS ROSY

China’s economy faces one of its slowest growth rates in decades: a gigantic property bubble has burst, youth unemployment recently hit record highs, and the private sector has been paralysed by its zero-COVID policy and a series of crackdowns on industries authorities say had seen “barbaric” expansion.

Investors had hoped that China’s more targeted enforcement of COVID curbs could herald more significant easing, but many analysts are cautioning against being too bullish.

Experts caution that full reopening requires a massive vaccination booster effort and a change in messaging in a country where the disease remains widely feared. Authorities say they plan to build more hospital capacity and fever clinics to screen patients, and are formulating a vaccination drive.

“The real picture may not be as rosy as it seems,” Nomura analysts wrote, saying they only expected any reopening to accelerate after March next year, when the reshuffle of China’s top leadership is completed.

“Reopening could be back and forth as policymakers may back down after observing rapid increases in cases and social disruptions. As such, local officials may be even more reluctant to be the initial movers when they try to sound out Beijing’s true intentions,” Nomura wrote.

Reporting by the Beijing and Shanghai newsroom; Writing by Brenda Goh; Editing by Tony Munroe, Miral Fahmy, Gerry Doyle, Raissa Kasolowsky and Emelia Sithole-Matarise

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