BofA warns Fed risks policy mistake with early rate cuts
Investing.com-- S&P 500 lost steam after hitting record highs Thursday, even as Meta Platforms, and Microsoft surged after reporting blowout quarterly results.
At 3:08 p.m. ET (20:08 GMT), the Dow Jones Industrial Average traded 120 points, or 0.3%, the S&P 500 index fell 0.01% after hitting a record high of 6,427.02, and the NASDAQ Composite fell 0.3%.
Meta, Microsoft surge after robust earnings
The first results from the so-called "Magnificent Seven" group emerged after the close of the previous session, with tech giants Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) impressing after blowout second-quarter results and guidance.
Meta Platforms stock soared after strength in the Facebook-owner’s crucial advertising business powered better-than-anticipated sales in the April-to-June period and raised hopes that the company’s artificial intelligence investments are beginning to bear fruit.
AI played a major role in results from Microsoft as well, with the nascent technology supercharging performance at the software giant’s cloud computing division.
Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN) are set to report their results after the close Thursday.
Elsewhere, Comcast (NASDAQ:CMCSA) stock rose after the mass media giant reported stronger-than-expected second-quarter results despite a loss of broadband customers.
Biogen (NASDAQ:BIIB) stock gained after the drugmaker posted better-than-anticipated first-quarter revenue and raised its full-year guidance thanks in part to solid sales of its Alzheimer’s drug.
Norwegian Cruise Line (NYSE:NCLH) stock surged after the cruise operator reported record second-quarter revenue and reaffirmed full-year guidance.
CVS Health (NYSE:CVS) stock gained strongly after the health insurer raised its annual profit forecast after beating estimates for second-quarter profit, as tight oversight of higher medical costs led to improved performance for its Aetna health insurance business.
On the flip side, Qualcomm (NASDAQ:QCOM) stock slumped as the looming loss of Apple (NASDAQ:AAPL) as the chip maker’s biggest modem customer outweighed its upbeat quarterly forecast.
U.S. labor market remains stable
Data released earlier Thursday showed that the number of Americans filing new applications for unemployment benefits increased marginally last week, suggesting that the labor market remained stable, though it is taking longer for laid-off workers to find new opportunities.
Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 218,000 for the week ended July 26, the Labor Department said on Thursday.
These numbers will serve as a precursor to the all-important nonfarm payrolls reading due out on Friday.
Additionally, U.S. consumer spending increased in June after showing no growth in the prior month, while a reading of underlying inflation edged up slightly, in the latest batch of a barrage of economic data this week that could provide a sense of the impact of sweeping U.S. tariffs.
Personal spending, which accounts over two-thirds of economic activity, rose by 0.3% last month following a mark of 0.0% in the prior month.
Meanwhile, the month-on-month headline Personal Consumption Expenditures Price Index ticked up by 0.3%, in line with estimates and accelerating slightly from 0.2% in May. In the twelve months to June, the PCE price index came in at 2.6%, faster than expectations of 2.5% and a prior rate of 2.4%.
So-called "core" PCE, stripping out more volatile items like food and fuel, came in at 0.3% month-on-month and 2.8% year-over-year.
"As was the case in the consumer price index and producer price index, there is evidence of tariffs placing upward pressure on prices [...], something that will play out further in the coming months considering that the import taxes are only just now seeping into the data," analysts at Vital Knowledge said in a note.
The Federal Reserve kept interest rates unchanged on Wednesday, but two Fed governors, Michelle Bowman and Christopher Waller, broke ranks, voting against the decision, marking the first double dissent since 1993.
This continued pause on cuts has drawn the ire of President Donald Trump, who has called on the Fed to quickly ratchet down rates to help boost growth.
Trump posted on his social media platform: "Jerome ’Too Late’ Powell has done it again!!! He is TOO LATE. Put another way, ’Too Late’ is a TOTAL LOSER, and our Country is paying the price!"
“Fed Chair Powell chose to put himself back on direct collision course with the President by suggesting that it could be viewed that the Fed are “looking through” tariff induced inflation by not HIKING rates today,” ING analysts said in a note.
Trump announces 15% tariffs on S.Korea, 25% on India
President Donald Trump said late Wednesday that the U.S. will impose a 15% tariff on imports from South Korea, with South Korea set to invest $350 billion in the U.S. and purchase $100 billion of energy products.
Additionally, Trump signed a proclamation imposing a 50% tariff on semi-finished and copper-intensive products starting Aug. 1, citing national security concerns
He also announced a 25% tariff plus penalties on India starting August 1, citing the country’s purchases of Russian military equipment and energy.
Deals with several countries remain unresolved, with Trump’s elevated "reciprocal" tariffs set to take effect on August 1.
Peter Nurse, Ayushman Ojha contributed to this article