US Stocks Edge Lower On Accelerating Rate-linked Woes

Wall Street’s indexes edged lower on Monday as investors await the US central bank’s Chair Jerome Powell’s speech for direction as well as clues on when the Fed could start interest rate cuts. The latest non-farm payrolls report highlighted the robust situation of the labour market in the United States and triggered concerns of rates staying higher for longer.

Focus will be on comments from Fed officials this week, including Powell on Tuesday, regarding any potential change in the central bank’s dovish language after last week’s data that clearly showed services activity were stronger in January.

Everything is about what interest rates’ expectations are in the upcoming monetary policy meetings, and today they are up a decent amount. The Fed had initially pulled rates’ outlook down on Wednesday, but then the jobs figure came out and it counterbalanced everything that the Fed previously said.
On Monday, at 12:44 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 81.03 points, or 0.24%, at 33,844.98, the S&P 500 (.SPX) was down 25.44 points, or 0.62%, at 4,111.04, and the Nasdaq Composite was down 91.59 points, or 0.76%, at 11,915.36.

All of the 11 major S&P 500 sector indexes were in the red, with a 1.3% fall in materials (.SPLRCM) leading declines.


US-listed Chinese stocks such as Pinduoduo Inc (PDD.O) and Baidu Inc fell 3.1% and 1.0%, respectively, on geopolitical concerns after a US military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday.

Traders will also await earnings reports from Walt Disney Co, PepsiCo Inc and Abbvie Inc this week. Declining issues outnumbered advancers for a 3.95-to-1 ratio on the NYSE and a 1.91-to-1 ratio on the Nasdaq. The S&P index recorded five new 52-week highs and one new low, while the Nasdaq recorded 65 new highs and 17 new lows.

Traders, investors and market participants conceive that the benchmark rate peaking at 5.1% by July, in line with what most policymakers have backed repeatedly.

US equities have recovered strongly in 2023, led by Megacap growth stocks amid short-lived hopes that the Fed will temper its aggressive rate hikes, which in turn could alleviate some pressure on equity valuations.

Analysts expect quarterly earnings of S&P 500 firms declining 2.8% in the fourth quarter. Meanwhile, Tesla Inc (TSLA.O) bucked the overall trend with a 2.1% gain after a US jury found Chief Executive Elon Musk and his company were not liable for misleading investors through Musk’s tweets in 2018 saying he had “funding secured” to take the electric-vehicle maker private.