New York (AFP) – US and European stocks slumped Thursday as investors weighed another wave of corporate results, economic data, and the likelihood of another interest rate cut. After rising throughout the summer and early part of the fall, US stocks have been choppy in recent weeks as a government shutdown depletes investors of key updates on the economy.
“We are in a sense running out of catalysts right now to either support or propel stock prices,” said Sam Stovall of CFRA Research. “The market decided to take whatever profits it can and await additional news that could become encouraging once again.” Investors and policymakers alike have been left in a fog as the government has delayed the release of key data on employment, trade, retail sales, and others. “Financial markets find themselves groping around in the dark,” said Chris Beauchamp, chief market analyst at investing and trading platform IG.
Chicago Federal Reserve President Austan Goolsbee, who has been supportive of lowering interest rates, told CNBC in an interview that making cuts amidst a lack of data on inflation made him “uneasy.” With key economic data produced by the US government unavailable due to the shutdown, investors have been turning to private data sources. A report by outplacement firm Challenger, Gray & Christmas said the number of layoff announcements in October hit the highest level in 22 years. The report “painted a grim picture of the jobs market,” said Joe Mazzola, head trading and derivatives strategist at Charles Schwab brokerage.
The report found that this year has been the worst for layoffs since 2020, when the labor market was decimated by the pandemic, and that hiring has slowed to a 14-year low. However, the report “bolstered the case for a Federal Reserve rate cut in December despite Chairman Jerome Powell’s unexpectedly hawkish tone following the Fed meeting last month,” Mazzola added.
Investors were also digesting news that a majority of the US Supreme Court was skeptical about the legality behind a swath of Trump’s sweeping tariffs, which also lent support to equities. “Is it good news? Paradoxically, not really,” said Swissquote Bank senior analyst Ipek Ozkardeskaya, who noted that the litigation means heightened uncertainty on international trade dynamics and how much tariff revenue will be available to the US Treasury.
Investors were also reacting to the Bank of England’s decision, in a tight vote, to keep its key interest rate unchanged before the UK’s Labor government presents its budget this month. Weighing on European sentiment were some poorly received company earnings and official data that showed industrial production in Germany rebounded less than expected in September. Shares in Franco-Dutch group Air France-KLM plunged more than 14 percent after it reported a drop in third-quarter net profit. In New York, shares in chip-maker Qualcomm fell 3.6 percent despite a positive earnings report. Tesla shares dropped 3.5 percent ahead of a vote by shareholders on a pay package for Elon Musk that could reach as much as $1 trillion.
– Key figures at around 2120 GMT –
New York – Dow: DOWN 0.8 percent at 46,912.30 (close)
New York – S&P 500: DOWN 1.1 percent at 6,720.32 (close)
New York – Nasdaq Composite: DOWN 1.9 percent at 23,053.99 (close)
London – FTSE 100: DOWN 0.4 percent at 9,735.78 (close)
Paris – CAC 40: DOWN 1.4 percent at 7,964.77 (close)
Frankfurt – DAX: DOWN 1.3 percent at 23,734.02 (close)
Tokyo – Nikkei 225: UP 1.3 percent at 50,883.68 (close)
Hong Kong – Hang Seng Index: UP 2.1 percent at 26,485.90 (close)
Shanghai – Composite: UP 1.0 percent at 4,007.76 (close)
Euro/dollar: UP at $1.1548 from $1.1492 on Wednesday
Pound/dollar: UP at $1.3135 from $1.3050
Dollar/yen: DOWN at 153.04 yen from 154.12 yen
Euro/pound: DOWN at 87.91 pence from 88.06 pence
Brent North Sea Crude: DOWN 0.2 percent at $63.38 per barrel
West Texas Intermediate: DOWN 0.3 percent at $59.43 per barrel
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© 2024 AFP
