Stocks end near flat as investors assess earnings, data
STORY: U.S. stocks ended mostly lower on Thursday, as investors digested the latest batch of economic data and comments from Federal Reserve officials who suggested the central bank is unlikely to cut interest rates in the near future.
The Dow finished roughly flat but in positive territory. The S&P 500 shed two-tenths of a percent, while the Nasdaq dropped half a percent.
Labor market data out Thursday as well as a gauge of manufacturing showed a resilient U.S. economy in the face of higher interest rates.
New York Federal Reserve President John Williams cited the robust economy as a reason to hold rates steady, while Atlanta Federal Reserve President Raphael Bostic says he is quote "comfortable being patient" as inflation is returning to the Fed's 2% target slower than previously expected.
Ben McMillan, Chief Investment Officer at IDX Advisors, says the combination of strong economic data and the potential for “higher for longer” rates should have investors bracing for a new reality.
“Inflation's looking very sticky. The jobs reports have been looking very strong. And so we went from, you know, coming into 2024 with an expectation of six or potentially even seven rate cuts with the first one being in March. Now, all of a sudden, the Fed has backtracked on that. And, you know, there might only be markets pricing in one, maybe two rate cuts. I've heard as recently as today that, you know, there might be some discussions with the Fed about a potential rate increase at the end of the year. And so that is a big delta for the markets to digest. And I think a lot of that information has come in the last couple of weeks. And that's why we're seeing risk assets in particular, things like technology stocks, even hybrid assets like Bitcoin in crypto, for example, starting to reprice to this new reality.”
In earnings news, Las Vegas Sands beat quarterly expectations but shares of the casino company plunged more than 8.5%, as multiple brokerages cut their price target on the stock, citing weakness in its Macau operations.
Shares of Equifax also fell roughly 8.5% after the credit ratings firm forecast its second-quarter revenue below analysts estimates.
And shares of Netflix, which ended half a percent lower, dropped even further in extended trading after the streaming video pioneer forecast revenue growth slightly below analysts targets.
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