A discouraging report on Friday morning suggested sentiment is unexpectedly souring among US consumers.
The S&P 500 fell 0.9 per cent and erased what had been a modest gain for the week. It’s one of the worse drops for the index so far in the young year, but it remains near its record set two weeks ago.
That’s a full percentage point above what consumers said they were expecting a month earlier, and it’s the second straight increase of an unusual amount. Economists pointed to the possibility of US tariffs on a wide range of imported products, which President Donald Trump has proposed and could ultimately push up prices for US consumers.
For Scott Wren, senior global market strategist at Wells Fargo Investment Institute, the jobs report did nothing to change his forecast for the Fed to cut the federal funds rate just once in 2025. That’s a touch more conservative than many traders on Wall Street, who collectively see a 45 per cent chance the Fed will cut at least twice, according to data from CME Group. Of course, some traders are also betting on the possibility for zero cuts.
In the meantime, stocks of big US companies continue to swing as they report how much profit they made during the last three months of 2024. Most are reporting better results than expected, which is typical, but that’s not always enough. Expedia CEO Ariane Gorin said demand for travel during the latest quarter was stronger than expected, and the company is also bringing back its dividend for investors. It had suspended its payouts to shareholders in 2020 after the COVID-19 pandemic crushed the travel industry.
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