In a cautious start to Wednesday’s trading session, US stocks opened lower, suggesting a potential pullback in the record-setting rally as overseas cooling inflation bolstered confidence in the prospect of early-year interest-rate cuts. The Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and the Nasdaq Composite (^IXIC) each experienced a marginal decline of approximately 0.2% shortly after the opening bell.
Tuesday saw stocks extending their rally, with the Dow achieving its fifth consecutive record close and the S&P 500 inching closer to its all-time high from January 2022. Investors appeared unfazed by hawkish remarks from Federal Reserve officials, who sought to temper expectations about the central bank swiftly reducing benchmark rates.
Optimism regarding a decline in price pressures in major economies received a boost following a surprising drop in UK inflation to its lowest level in two years. This sentiment was further reinforced by a dip in German wholesale inflation. The decline in bond yields continued this month, with the 10-year Treasury yield (^TNX) retracting approximately 4 basis points to hover around 3.9%.
However, concerns are emerging about whether the anticipated faster and earlier rate cuts might inadvertently push the US economy into a downturn. All eyes are on upcoming data releases for insights into whether the Federal Reserve can successfully orchestrate a “soft landing.” A report on existing home sales is expected on Wednesday, with updates on GDP scheduled for Thursday and PCE inflation – the Fed’s preferred gauge – due on Friday.
In the realm of individual corporations, FedEx (FDX) faced a turbulent start as its shares plummeted by over 10% in early trading. The delivery company fell short of quarterly profit expectations and revised its full-year revenue forecast downwards, citing a decline in demand from the US Postal Service.
In conclusion, the day unfolded with a cautious tone as US stocks opened lower, highlighting the market’s response to global economic factors and prompting investors to carefully navigate the evolving landscape.
Source: Yahoo Finance
