U.S. stocks close lower ahead of inflation data


  • World
  • Thursday, 29 Feb 2024

NEW YORK, Feb. 28 (Xinhua) -- U.S. stocks ended lower on Wednesday, after the Federal Reserve held firm on its decision to hold off cutting U.S. interest rates in the near future.

The Dow Jones Industrial Average fell 23.39 points, or 0.06 percent, to 38,949.02. The S&P 500 declined 8.42 points, or 0.17 percent, to 5,069.76. The Nasdaq Composite Index lost 87.56 points, or 0.55 percent, to 15,947.74.

Seven of the 11 primary S&P 500 sectors ended in green, with real estate and financials leading the gainers by going up 1.28 percent and 0.35 percent, respectively. Meanwhile, communication services and technology led the laggards by dropping 0.92 percent and 0.55 percent, respectively.

In data released on Wednesday, the first revision of fourth-quarter 2023 U.S. gross domestic product indicated that the economy expanded at a slightly lower rate than the initially reported 3.3 percent annual pace. The revised growth rate was adjusted downward to a still-strong 3.2 percent.

Inflation remained relatively subdued last quarter, although it was revised slightly higher from previously reported estimates. For updated signals regarding the timing of potential rate cuts, investors will closely monitor the release of the U.S. core personal consumption expenditures (PCE) price index data for January, scheduled for publication on Thursday.

Additionally, according to the Commerce Department's advance estimate, U.S. trade deficit in goods widened by 2.6 percent to 90.2 billion dollars in January. This release precedes the forthcoming report on the PCE price index for January, which serves as the Federal Reserve's preferred inflation gauge.

"Now that those earnings catalysts are behind us in the rearview mirror there could be some softness as now the market has to get its arms around the inflation trajectory and the Federal Reserve's reaction, whether it's with rhetoric or a higher-for-longer policy," said Keith Buchanan, senior portfolio manager at GLOBALT Investments in Atlanta.

Federal Reserve Bank of New York President John Williams said the U.S. central bank will likely cut its benchmark lending rate "later this year," adding that he still expects three rate cuts in 2024 is "a reasonable starting point."

"The economy is still strong, we expect to see positive growth and inflation to keep coming down," Williams told reporters Wednesday. "So something like three rate cuts is a reasonable starting point when you think about it."

Williams' statement echoed the sentiments expressed by Fed Governor Michelle Bowman on Tuesday, indicating that they were not eager to reduce U.S. interest rates due to ongoing inflation concerns.

CME Group's FedWatch Tool now shows a 52.8 percent chance for a cut of at least 25 basis points in June.

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