MARKET SNAPSHOT
U.S. stocks ended lower as Nike shares fell and key inflation data showed a slight slowdown, matching market expectations. Treasury yields finished at more-than-two-week highs amid a round of selling. The dollar was a bit weaker, and gold was flat. Oil ended mixed as Middle East fears simmer.
MARKET WRAPS
EQUITIES
Nike shares tumbled to their worst day on record, dragging the Dow and S&P 500 to losses.
Despite declining 0.4%, the S&P 500 ended within 27 points of a record high. The tech-laden Nasdaq Composite shed 0.7% but also remains near its all-time high. The Dow Jones Industrial Average lost 0.1%.
Nike, which reported an unexpected sales decline and issued a gloomy outlook Thursday after market hours, fell 20% in its biggest one-day decline on record. Meanwhile, the personal-consumption expenditures price index rose 2.6% in May from a year earlier, in line with economists' expectations.
Jeremiah Buckley, portfolio manager at Janus Henderson Investors, said data like Friday's inflation gauge increases the likelihood that the Federal Reserve will cut interest rates at its September meeting, as many investors and traders expect.
"The inflation numbers continue to point in the right direction, so the Fed has the flexibility to do so," he said. "There's a risk that if the Fed waits too long there will be impacts on housing and construction that will be hard to reverse."
Earlier in the day, Chinese shares ended mixed.
The benchmark Shanghai Composite Index rose 0.7%, the Shenzhen Composite Index closed about 0.3% higher, and the ChiNext Price Index declined 1.2%. Investors are closely watching the upcoming Third Plenum. Hong Kong's Hang Seng Index closed flat as tech companies and electric-vehicle makers dragged on the market.
Japan's Nikkei Stock Average ended 0.6% higher, led by gains in machinery makers, trading houses and banks as a weak yen raised hopes for earnings growth.
Australia's S&P/ASX 200 closed 0.1% higher amid strength in financial stocks.
New Zealand's NZX-50 market was closed for the Matariki holiday.
COMMODITIES
Oil futures ended mixed as investors continued to fret over the possibility of a wider Middle East conflict that could threaten flows of crude out of the region.
West Texas Intermediate crude for August delivery declined 0.2% to end at $81.54 a barrel on the New York Mercantile Exchange. August Brent gained two cents to $86.41 a barrel on ICE Futures Europe.
Continued exchanges of fire over the Lebanon border between Israel and Iran-backed Hezbollah have heightened fears of an all-out war.
Front month Comex July gold gained 0.1% to $2327.70
TODAY'S TOP HEADLINES
Fed's interest-rate policy is working, just taking longer than everyone would want, Daly says
Federal Reserve interest-rate policy is working to lower inflation but maybe not as quickly as consumers would hope for, San Francisco Fed President Mary Daly said Friday.
"It is really challenging to look anywhere and not see monetary policy working," Daly said, in an interview on CNBC.
"We have growth slowing, spending slowing, the labor market slowing, inflation coming down. That's how policy works. Now it's taking longer than we'd all like, of course, that that doesn't mean it's not working," she added.
Slowing U.S. Inflation Fuels Expectations of Interest Rate Cuts
The U.S. Federal Reserve's preferred inflation gauge met forecasts in May, keeping alive expectations that interest rates could fall faster than policy makers forecast.
The core Personal Consumption Expenditures Price Index, which excludes volatile energy and food prices, increased 2.6% from a year ago, slowing from April's 2.8% pace. The reading met the consensus of economists surveyed by The Wall Street Journal.
Core PCE inflation rose 0.1% in the month, compared to a 0.2% increase in April. The headline 12-month reading was 2.6%, slowing from April's 2.7% pace. In the month, the PCE was flat after rising 0.3% in April, marking the first time consumer prices didn't go up in six months.
Consumer sentiment perks up at the end of June, but inflation still a big worry
The numbers: Consumers were slightly more optimistic about the economy at the end of June, but the effects of high inflation in the past few years still weighed on their minds.
The final reading of the consumer sentiment index rose to 68.2 in June from a preliminary 65.6 earlier in the month, but it's still the lowest level in seven months.
The index also stands well below a prepandemic peak of 101.
AI Frenzy Propels Stocks to Monster First Half
The AI fervor powering the stock market shows no sign of cooling down.
Much as in 2023, investors piled into bets in the first half of this year that the artificial intelligence boom is just getting started. They sent Nvidia shares soaring 149%, propelling the graphics-chip maker's market value above $3 trillion and briefly making it the most valuable company in the world.
Nvidia's ascent is a big reason the S&P 500 has climbed 14% this year-nearly as much as in last year's standout first half-even as a series of hot inflation readings damped investors' hopes that the Federal Reserve would soon begin to cut interest rates.
Nike's Slow Recovery Is Testing Investors' Patience
Once the top dog, Nike has been losing both customers and investors over the past year. Can it deliver a good comeback story?
Judging by Nike's latest results, not yet. The company's shares dropped 12% in after-hours trading Thursday following its earnings, on top of their 17% decline over the past 12 months.
The largest athletic apparel brand in the world reported on Thursday that sales were flat on a currency-neutral basis in its quarter ended May 31 compared with a year earlier, worse than the 1.6% growth that analysts were expecting. For the 12-month period, Nike's sales rose 1% on a currency-neutral basis, the slowest growth the brand has seen in the past 14 years, excluding the decline seen in the pandemic shock of 2020. Net income rose 45%, largely because of cost cuts, which included head-count reductions.
Expected Major Events for Monday
00:00/SKA: Jun Trade data
00:30/INA: Jun Indonesia Manufacturing PMI
00:30/SKA: Jun South Korea Manufacturing PMI
00:30/TAI: Jun Taiwan Manufacturing PMI
00:30/JPN: Jun Japan Manufacturing PMI
00:30/MAL: Jun Malaysia Manufacturing PMI
00:30/PHI: Jun Philippines Manufacturing PMI
00:30/THA: Jun Thailand Manufacturing PMI
01:00/AUS: Jun Melbourne Institute Monthly Inflation Gauge
01:30/AUS: Jun ANZ-Indeed Job Ads
01:45/CHN: Jun China Manufacturing PMI
04:00/INA: Jun CPI
05:00/JPN: Jun Consumer Confidence Survey
05:00/JPN: Jun Auto sales
06:30/AUS: Jun Commodity Price Index
08:00/TAI: Jun CIER PMI
22:00/NZ: 2Q NZIER Quarterly Survey of Business Opinion
22:45/NZ: May Building Consents Issued
23:00/SKA: Jun CPI
23:50/JPN: Jun Monetary Base
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
June 30, 2024 16:30 ET (20:30 GMT)
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