Mixed Results in U.S. Manufacturing and Fed Rates Hike Could Sway Markets
By U.S. stocks started the month of March in the red as key manufacturing data offered mixed results and two Federal Reserve officials suggested a more aggressive rate-hiking campaign in the coming months.[0] The Dow Jones Industrial Average (^DJI) opened down 30 points, or 0.1%, to 32,620, according to FactSet data.[1] The S&P 500 (^GSPC) fell by 10 points, or 0.3%, to 3,960, while the Nasdaq Composite (^IXIC) shed 20 points, or 0.2%, to 11,433.[1]
In other single stock moves, Seagen Inc. (SGEN) shares jumped Monday morning after a report from The Wall Street Journal said Pfizer (PFE) is in early-stage talks to acquire cancer drugmaker company in what could be a multi-billion dollar deal.[2] UNP's stock price rose after an activist investor put pressure on the company to switch its CEO.[3]
On the economic front, consumer confidence in February fell to its lowest reading since November, pointing to signs strong consumer spending, which has underpinned strong growth so far this year, may be starting to slow.[4] On Monday, data showed that durable goods orders declined more than anticipated, coming in at a decrease of -4.5% m/m for January. On the other hand, core durable goods orders rose higher than expected, with a +0.7% m/m growth rate in January, instead of the anticipated +0[5] Furthermore, pending home sales in the U.S. saw the biggest rise in two-and-a-half years, increasing 8.1% month-over-month in January, surpassing the expected 1.0% month-over-month growth.[5]
On Monday, Federal Reserve Governor Philip Jefferson noted that the rate of inflation for services in the U.S. is still “stubbornly high.” According to Jefferson, “I am under no illusion that it is going to be easy to get the inflation rate back down to 2%,”[6] The Federal Reserve's potential increase of the interest rate by 50 basis points in the upcoming mid-March FOMC meeting should not come as a surprise to the markets.[7] The Federal Reserve must determine whether they should adopt a more assertive approach in increasing interest rates, as they have not accomplished much thus far.[7] In spite of the frequent rate increases, the inflation rate in the U.S. has only reached 6.4%, which is substantially higher than the desired rate of 2%.[7]
0. “Stock market news today: Fears of high interest rates hit investors” Markets Insider, 1 Mar. 2023, https://markets.businessinsider.com/news/stocks/stock-market-news-today-investors-fear-high-interest-rates-fed-2023-3
1. “U.S. stocks kick off March in the red as Dow falls to fresh 2023 lows” MarketWatch, 1 Mar. 2023, https://www.marketwatch.com/story/u-s-stocks-kick-off-march-in-the-red-as-dow-falls-to-fresh-2023-lows-301b1cd8
2. “Stock Market Climbs Off Lows; Driving Technology Stock Rebounds” Investor's Business Daily, 27 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/stock-market-bulls-back-after-a-rough-week-oil-tankers-sail-to-highs
3. “Dow, Nasdaq, S&P 500 bounce back after last week's drop (SP500)” Seeking Alpha, 27 Feb. 2023, https://seekingalpha.com/news/3941369-dow-nasdaq-sp-500-bounce-back-after-last-weeks-drop
4. “Stock market today: Dow suffers monthly loss as Fed fears wound stocks in February By Investing.com” Investing.com, 28 Feb. 2023, https://www.investing.com/news/stock-market-news/stock-market-today-dow-suffers-monthly-loss-as-fed-fears-wound-stocks-in-february-3017564
5. “Stocks Mixed Before The Open As Fed Fears Persist, Target Earnings On Tap” Barchart, 28 Feb. 2023, https://www.barchart.com/story/news/14619032/stocks-mixed-before-the-open-as-fed-fears-persist-target-earnings-on-tap
6. “Dow futures rise 70 pts; Target earnings, Goldman investor day in focus By Investing.com” Investing.com, 28 Feb. 2023, https://www.investing.com/news/stock-market-news/dow-futures-rise-70-pts-target-earnings-goldman-investor-day-in-focus-3016858
7. “Stock Market News Today: Indices in the Red” msnNOW, 1 Mar. 2023, https://www.msn.com/en-us/money/markets/stock-market-news-today-indices-in-the-red/ar-AA184YmC
