STORY: U.S. stocks ended mostly lower on Thursday as investors digested the latest economic data and comments from Federal Reserve officials that suggested the central bank is unlikely to cut interest rates in the near future.
The Dow was almost flat, but ended in positive territory. The S&P 500 fell two-tenths of a percent, and the Nasdaq fell half a percent.
Labor market data and manufacturing indicators released Thursday showed the U.S. economy is resilient in the face of rising interest rates.
New York Fed President Williams cited the strong economy as a reason to keep interest rates on hold, while Atlanta Fed President Rafael Bostic said he is “patient” as inflation returns to the Fed's 2% target more slowly than previously expected. It's comfortable.''
Ben McMillan, chief investment officer at IDX Advisors, said the combination of strong economic data and the potential for interest rates to be “high for an extended period of time” means investors need to prepare for a new reality.
“Inflation looks very stagnant. The employment numbers look very strong. So we're expecting six, maybe seven rate cuts into 2024. , the first rate cut was in March. Now, all of a sudden, the Fed has reversed that. And you know, the market is only pricing in one rate cut, maybe two. , we heard not too long ago that there could be some talks with the Fed about a potential rate hike at the end of the year. So this is a big delta for the market to digest. I think a lot of it has come in in recent weeks, and that's caused risk assets, especially technology stocks, and even hybrid assets like cryptocurrencies, Bitcoin, to reprice to suit this new reality. That’s why I started.”
In earnings news, Las Vegas Sands beat quarterly estimates, but the casino company's stock price fell more than 8.5% as multiple brokerages lowered their price targets due to weakness in the Macau business.
Equifax shares also fell about 8.5% after the credit rating agency predicted second-quarter sales would be lower than analysts expected.
Netflix shares, which also ended 0.5% lower, fell further in after-hours trading after the streaming video pioneer projected revenue growth that was slightly below analysts' expectations.
