Most stocks fell on Wall Street on Tuesday, but the market hovered near a 20-month high following a series of combined reports that fueled the question of whether the U. S. economy can achieve a better landing where it wipes out peak inflation but avoids a fall. recession.
The Standard Index
Stocks fell even sharper in Asia on considerations about the health of China’s economy, the world’s second-largest.
On Wall Street, KeyCorp fell 3.7% and led a slump for bank stocks after it cut its forecast for income from fees and other non-interest income. But gains of more than 2% for Apple and Nvidia, two of the market’s most influential stocks, helped to blunt the losses.
U.S. stocks and Treasury yields wavered after reports showed that employers advertised far fewer job openings at the end of October than expected, while growth for services businesses accelerated more last month than expected.
Hopes have recently risen on Wall Street that the U. S. economy is slowing enough from its recent peak. Inflation that is too high would give inflation more fuel, but inflation that is too low would lead to a recession.
With inflation below its peak two summers ago, Wall Street is hopeful that the Federal Reserve can finally end its market-shaking interest rate hikes and possibly soon resort to a rate cut. This can also help the economy avoid a recession and spice up all types of investment prices.
In particular, investors were expecting a slowdown in task release data. The hope is that the hard-work market can calm down more by eliminating open positions than by laying off many workers. Tuesday’s report showed that employers reported just 8. 7 million tasks in the past day. in October, 617,000 fewer than last month.
This is the lowest point since 2021, and “knowledge supports our view that rates have peaked and the Fed’s next step will be a rate cut” in the spring of 2024, said Rubeela Farooqi, lead U. S. economist at High Frequency Economics.
A separate report said activity in the U. S. services sector grew for the 41st time in the past 42 months, with expansion recorded across the board from agriculture to wholesale trade. The strength of the sector offset the weakness in the production sector.
In the bond market, Treasury yields continued to fall from their highs last October.
The yield on the 10-year Treasury fell to 4.18% from 4.26% late Monday, offering some more breathing space for stocks and other markets. It had been above 5% and at its highest level in more than a decade during October.
The yield on the two-year Treasuries, which largely tracks the Federal Reserve’s expectations, has followed an erratic trend following the economic reports. It rose from 4. 61% just before the release of the report to 4. 57%, then rose on a year-over-year basis before returning to 4. 57%.
Traders widely expect the Federal Reserve to hold its key interest rate steady at its next meeting next week, before potentially cutting rates in March, according to data from CME Group.
Fed officials have recently hinted that the federal funds rate may indeed already be at its peak. It’s above 5.25%, up from nearly zero early last year. But Fed Chair Jerome H. Powell and others have also warned Wall Street about being overzealous in its predictions about how early a cut could happen.
Falling yields are one of the reasons why crypto costs have risen recently. Excitement for an imaginable Bitcoin-linked exchange-traded fund that would open it up to new types of investors has also helped propel it above $43,000 recently.
The surge in interest helped Robinhood Markets report a about 75% increase in crypto trading volumes in November compared to last month. It also said consumers added about $1. 4 billion in net deposits the month and its own shares rose 10. 3%.
On the losing end was Take-Two Interactive, which slipped 0.5% after a trailer for its highly anticipated “Grand Theft Auto VI” video game said it’s coming in 2025. That was later than some analysts expected.
In markets, stocks fell 1. 9% in Hong Kong and 1. 7% in Shanghai after ratings firm Moody’s said it could simply downgrade China. Its economic expansion is slowing and it is facing developing upheavals due to its real estate sector.
Stocks also fell in Japan and South Korea but were mixed across Europe.
AP editors Yuri Kageyama and Matt Ott contributed to this report.
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