Stocks on Wall Street are slumping alongside bond yields after more signals suggested the US economy’s growth is slowing.
The S&P 500 was down 1.7 per cent in afternoon trading after weak data on US manufacturing helped extinguish a rally from earlier in the morning. The Dow Jones was down 1.5 per cent and the Nasdaq composite was 2.7 per cent lower. The Australian sharemarket is set for heavy losses, with futures at 5.04am AEST pointing to a loss of 170 points, or 2.1 per cent, at the open. The ASX added 0.
Together, the data likely remove upward pressure on inflation and give more leeway for the Federal Reserve to cut interest rates soon. A day earlier, yields sank after Fed Chair Jerome Powell gave the clearest indication yet that inflation may have slowed enough for an easing of rates to begin in September.
But the figures could be skewed by the effects of Hurricane Beryl, warns Kevin Khang, senior international economist at Vanguard. It could mean a headline number that looks much worse than underlying factors say. The S&P 500 would have dropped even more Thursday if not for Meta Platforms and other stocks that reported better results for the spring than expected. Meta, the company behind Facebook and Instagram, was the biggest single force pushing upward on the S&P 500 and rose 4 per cent after reporting profit and revenue that topped analysts’ expectations.
While analysts said such spending will have an impact on its results, Meta Platforms highlighted how it’s already seeing some benefits from it, including traction with its AI glasses. In the bond market, the yield on the 10-year Treasury slumped to 3.98 per cent from 4.04 per cent late Wednesday and from 4.70 per cent in April.Traders are largely convinced that the Federal Reserve will cut its main interest rate in September. The only question for them is how many times it may cut this year and next.
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