Strong US data boosts dollar as Wall Street stocks fall again ~ EconomyLens.com

New York (AFP) – Wall Street stocks retreated while the dollar rallied Thursday following stronger than expected US economic data that could delay Federal Reserve interest rate cuts. The US government revised its second-quarter economic growth rate upwards on Thursday to 3.8 percent from 3.3 percent, as consumers spent more than expected. It marks the fastest quarterly growth rate in nearly two years.

“Is the US economy much stronger than believed?” queried InvestingLive currency analyst Adam Button, who added in a subsequent note that the US dollar could be poised to rally if there is a “big re-think” on the outlook for the US economy. The greenback rose Thursday against the euro, British pound, and Japanese yen.

But US equity indices retreated for a third straight day after posting a record on Monday. The stock market “did not like the good economic data we got this morning, because (it) basically calls into question the market’s assumption that the Fed will be cutting rates multiple times before the end of the year,” said Briefing.com analyst Patrick O’Hare. Analysts are focused on Friday’s release of the Fed’s preferred gauge of inflation — the Personal Consumption Expenditure (PCE) index — and next week’s nonfarm payrolls report.

The US central bank — citing a weak labor market — last week announced its first rate reduction of the year and forecast there could be two more by the end of 2025. But expectations were dealt a blow on Tuesday as Powell warned that stocks are “fairly highly valued” and that there was “no risk-free path” on rates. The PCE data “may also shift investor expectations over the speed and depth of additional easing measures from the US central bank,” said David Morrison, senior market analyst at financial services firm Trade Nation.

Among individual stocks, Intel shot up nearly nine percent following reports the company has approached Apple about investing in the struggling chipmaker. Apple rose 1.8 percent. Amazon fell 0.9 percent as it reached an agreement to pay $2.5 billion to settle allegations from a US regulator that it used deceptive practices to enroll consumers in Amazon Prime and made it difficult to cancel subscriptions. Starbucks dipped 0.5 percent as it announced it would cut about 900 jobs and shutter some underperforming stores as part of a cost-cutting drive.

In Europe, shares in German software giant SAP fell two percent after the EU launched an antitrust probe into the company. European stock markets were down at the close, including Zurich, which fell as the Swiss National Bank held rates at zero percent and warned that US tariffs were weighing on the economy.

– Key figures at around 2020 GMT –

New York – Dow: DOWN 0.4 percent at 45,947.32 (close)

New York – S&P 500: DOWN 0.5 percent at 6,604.72 (close)

New York – Nasdaq Composite: DOWN 0.5 percent at 22,384.70 (close)

London (close) – FTSE 100: DOWN 0.4 percent at 9,213.98

Paris (close) – CAC 40: DOWN 0.4 percent at 7,795.42

Frankfurt (close) – DAX: DOWN 0.6 percent at 23,534.83

Tokyo – Nikkei 225: UP 0.3 percent at 45,754.93 (close)

Hong Kong – Hang Seng Index: DOWN 0.1 percent at 26,484.68 (close)

Shanghai – Composite: FLAT at 3,853.30 (close)

Euro/dollar: DOWN at $1.1658 from $1.1738 on Wednesday

Pound/dollar: DOWN at $1.3335 from $1.3447