MARKET SNAPSHOT
U.S. stocks climbed after dropping sharply in the prior session. Treasurys rallied, sending yields lower, as traders considered whether there may have been an overreaction in the prior session to January's stronger-than-expected inflation data. Oil prices snapped a seven-day winning streak after a much larger-than-expected increase in U.S. crude stocks. Despite some weakness in the dollar, gold prices edged lower.
MARKET WRAPS
EQUITIES
Stocks regained their footing after a selloff sparked by inflation fears a day earlier.
The broad-based S&P 500 gained 1%, while the Dow Jones Industrial Average added 0.4%. Nine of the S&P 500's 11 sectors finished in the green.
Sectors that are especially sensitive to higher interest rates led the charge. The tech-heavy Nasdaq Composite gained 1.3%. The small-cap Russell 2000 index advanced 2.4%, after sliding 4% the previous day in its worst performance since June 2022.
"Inflation numbers are not going to go in a straight line, it's going to be lumpy," said Thomas Martin, a senior portfolio manager at Globalt Investments. "Yesterday's move was a knee jerk reaction-if it were a real problem, you'd see some follow through today. You aren't seeing that."
Earlier Wednesday, Japan's Nikkei Stock Average gave back 0.7%, dragged by waning Fed rate-cut prospects.
Hong Kong's Hang Seng Index added 0.8%, led by consumer- and leisure-related names.
Australia's S&P/ASX 200 shed 0.7% amid weakness in shares of large-cap banks and miners.
New Zealand's NZX-50 also lost 0.7%, a fifth consecutive decline, as Fletcher Building led real-estate stocks lower.
Markets in mainland China were closed for the Lunar New Year.
COMMODITIES
Oil futures settled lower, with U.S. prices posting their first loss in eight sessions, after official data revealed a 12 million-barrel weekly rise in domestic commercial crude inventories and declines in gasoline and distillate stockpiles.
West Texas Intermediate crude for March delivery fell 1.6% to settle at $76.64 a barrel on the New York Mercantile Exchange. April Brent crude declined 1.4% to $81.60 a barrel on ICE Futures Europe.
There's "no doubt" that seasonal refinery maintenance and the fact that the refinery in Whiting, Ind., is down caused part of the "impressive increase in weekly crude supplies," said Phil Flynn, senior market analyst at the Price Futures Group.
Front month Comex gold for February delivery lost 0.1% to settle at $1990.30 per troy ounce.
TODAY'S TOP HEADLINES
Fed's Goolsbee says some high monthly inflation readings won't knock his confidence
Inflation has been so well behaved that some high readings for a few months won't change the picture, Chicago Fed President Austan Goolsbee said Wednesday.
Because inflation fell so far so fast last year, "even if inflation comes in a bit higher for a few months, as many forecasts suggest, it would still be consistent with our path back to [the 2%] target," Goolsbee said, in talk at the Council of Foreign Relations in New York.
"There is nothing wrong" with some ups and downs, he added.
Mortgage demand falls as rates rise across the board
The numbers: Mortgage applications fell as rates rose across the board.
With the 30-year mortgage hitting the highest level since early December 2023, demand took a hit.
The overall market composite index - a measure of mortgage application volume - fell in the last week, according to the Mortgage Bankers Association (MBA) said on Wednesday.
Cisco Stock Slides On a Weak Outlook. The Company Is Cutting 5% of Its Staff.
Cisco Systems posted solid results for the January quarter, but the networking giant provided guidance for the next two quarters that fell well short of Wall Street estimates.
The company also announced that it plans to reduce its workforce by about 5% as part of a restructuring plan "in order to realign the organization and enable further investment in key priority areas." The company said the plan would result in about $800 million in charges for severance and other costs.
Cisco continues to deal with a pile-up of networking hardware inventory held by its customers. The company had warned in reporting October quarter results that an inventory glut at customers would result in slower shipments for at least a quarter or two. That trend seems to have continued, based on the company's January results and its guidance.
Morgan Stanley Is Laying Off Several Hundred in Wealth-Management Division
Morgan Stanley plans to cut several hundred jobs in its wealth-management division as new Chief Executive Ted Pick seeks to rein in costs in an area that is critical to the Wall Street firm's success but has shown signs of weakening lately.
The cuts, which include a small number of managing directors as well as non-customer-facing employees, are expected to hit less than 1% of the wealth unit's employees, which number less than 40,000 in total.
Affected employees are expected to be notified as soon as this week, according to people familiar with the matter.
Activist investor Trian assails Disney moves as 'spaghetti-against-the-wall plan'
Nelson Peltz's Trian Fund Management, which is headed for a showdown with Walt Disney Co. at the company's annual shareholders meeting on April 3, upped the ante on Wednesday in a stinging letter that dismissed Disney's latest moves as a "spaghetti-against-the-wall plan."
"With the stock waning and Disney facing another proxy contest, Disney appears to again be trying to distract shareholders with what we see as a fanciful tale, claiming it has 'turned the corner and entered a new era,'" Trian said in a letter to Disney shareholders, blasting the series of moves the company announced last week during its earnings report.
The media giant's DIS embattled board of directors announced a stock buyback of $3 billion - its first since 2018 - and declared a cash dividend of 45 cents a share, payable July 25. The dividend program had been suspended during the pandemic. Disney also guided to a 20% increase in earnings per share for fiscal year 2024, to $4.60, and announced it is investing $1.5 billion for an equity stake in Epic Games Inc., the publisher of the massively popular videogame "Fortnite."
Expected Major Events for Thursday
00:00/SIN: 4Q GDP
00:00/SIN: 4Q Balance of Payments
00:00/AUS: Feb Consumer Inflationary Expectations Survey
00:30/AUS: Jan Labour Force
00:30/AUS: Jan Foreign Exchange Transactions and Holdings of Official Reserve Assets
04:00/INA: Jan Trade Balance
04:30/JPN: Dec Revised Industrial Production
04:30/JPN: Dec Revised Retail Sales
08:00/HK: Jan Hong Kong port container throughput monthly estimates
08:00/PHI: Philippine Monetary Policy meeting and decision
08:30/HK: Dec External Merchandise Trade: Volume & Price Statistics
08:59/SKA: Jan Revised trade data
09:59/CHN: Jan FDI Foreign Direct Investment
09:59/PHI: Dec Overseas Filipino Workers Remittances figures
15:30/AUS: Dec Australia Conference Board Leading Index
21:00/SKA: Jan Import price index
21:00/SKA: Jan Export price index
21:30/NZ: Jan BNZ - BusinessNZ Performance of Manufacturing Index $(PMI.UK)$
23:00/SKA: Jan Economically Active Population Survey, including Unemployment
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(END) Dow Jones Newswires
February 14, 2024 16:57 ET (21:57 GMT)
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