Street Calls of the Week
Investing.com -- The S&P 500 notched a two-week winning streak despite slipping Friday, weighed down by rising Treasury yields and fresh data showing consumers continue to worry about the economy.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average fell 273 points, or 0.6%, the S&P 500 index was closed about 0.1% lower after hitting a fresh intraday record 6,594.67 earlier in the day. While the NASDAQ Composite added 0.5%.
Consumer sentiment softens again; Treasury yields rise
The University of Michigan Consumer Sentiment index, which tends to be negatively correlated with inflation, fell to 55.4 in September from 58.2 last month, missing expectations for unchanged reading.
The University of Michigan’s survey of preliminary expectations for one-year inflation was unchanged from prior month’s reading 4.8%, but inflation expectations over the next five years climbed to 3.9% from 3.5%.
Treasury yields rebounded from a recent dip, with yields on the 10-Year Treasury up about 6 basis points to 4.07%.
The rise in yields come even as the markets have almost fully priced a rate cut for next week.
Fed rate cut cemented for next week
Data on Thursday showed U.S. consumer prices rose slightly above expectations and the sharpest monthly increase since January, while weekly jobless claims jumped to 263,000, the highest level since 2021, underscoring signs of softening in the labor market after last week’s weak nonfarm payrolls report.
These data releases did little to alter expectations that the Fed will cut interest rates at its Sept. 16-17 meeting.
Traders in futures markets are pricing in a near-certainty of a 25 basis point reduction, with slim odds of a larger half-point move.
“Inflation was a touch higher than expected and tariffs are likely to keep it elevated over coming months, but the weakening of the jobs market is now the Fed’s priority, with rising jobless claims hinting at a pick-up in lay-offs at a time when hiring is subdued,” ING analysts said in a note.
The University of Michigan surveys are due later in the session, and investors are likely to keep a close eye on inflation expectations as a guide to future Fed interest rate moves.
Global equity funds register outflow
Global equity funds registered their first weekly outflow in five weeks through September 10 as investors locked in profits and trimmed their risk exposure.
According to LSEG Lipper data, investors withdrew a net $3.06 billion from global equity funds in the first week of net sales since August 6.
Outflows were driven by a net $10.44 billion in sales of U.S. equity funds, the most in five weeks. European and Asian funds drew net inflows of $3.77 billion and $1.87 billion, respectively.
Adobe lifts annual forecasts
In the corporate sector, Adobe Systems (NASDAQ:ADBE) is in the spotlight after the maker of popular editing platforms like Photoshop and Premiere Pro raised its annual financial forecasts, citing solid demand for its artificial intelligence-enhanced design software tools.
Elsewhere, luxury furniture maker RH (NYSE:RH) reported a quarterly revenue miss, while Super Micro Computer (NASDAQ:SMCI), the AI tech firm, announced it has begun volume shipments of its Nvidia Blackwell Ultra solutions to customers worldwide.
Microsoft (NASDAQ:MSFT) and OpenAI said on Thursday evening that they had reached a non-binding agreement over the AI start-up’s plans to transition to a for-profit organization.
There are also a number of IPOs set to start trading Friday, including the Winklevoss-led crypto exchange Gemini Space Station, Black Rock Coffee Bar, Via Transportation and Legence.
Peter Nurse, Ayushamn Ojha contributed to this article