US stocks end nearly flat in seesaw session

The stock market struggled to find direction on Wednesday as traders weighed comments from central bank chiefs on the outlook for the economy and interest rates.

The S&P 500 closed almost flat and above the 38.2% Fibonacci retracement level of around 3,815 that investors are watching closely. Quarterly portfolio rebalancing contributed to market volatility. Bonds and the dollar gained.

Federal Reserve Chairman Jerome Powell said the United States was “in great shape” and “well positioned to resist tighter monetary policy.” He reiterated the commitment to lower inflation, adding that the process is likely to cause “pain”. Powell spoke during a panel with European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey.

Volatility gripped markets this year on fears that a hawkish Fed could tip the economy into a recession. The S&P 500 is on track for its worst quarter since March 2020 amid soaring Treasury yields. The US central bank denied inflation and moved too slowly to try to stifle rising prices. That put it on a course to create a recession, if it hasn’t already, according to Rob Arnott of Research Affiliates.

“The scum certainly appears to have been removed from financial markets by this year’s pullback in stocks and bonds,” said James Solloway, chief market strategist at SEI. “That’s the good news. The bad news is that an economic recession and a corresponding decline in earnings may not yet be fully priced into the markets.

The bond market rose at the price of a half-point cut in the Fed’s benchmark rate at some point in 2023 as traders increased their bets on a US recession, eventually halting the tightening campaign aggressive central bank.

Fed Bank of Cleveland Chair Loretta Mester said officials must not just raise long-term inflation expectations and must act forcefully to rein in price pressures. Data on Wednesday showed U.S. consumer spending rose in the first quarter at the slowest pace of the pandemic recovery, marking a surprise downward revision that suggests an economy on weaker fundamentals than previously thought. .

Chief financial officers are increasingly pessimistic about the economy this year, with sentiment falling to near-decade lows. Respondents lowered their growth expectations, according to the latest quarterly results from The CFO Survey, a collaboration between Duke University’s Fuqua School of Business and the Richmond and Atlanta Fed Banks.

“As pre-earnings announcements and analyst reviews hit the tapes, we should get some idea of ​​whether the business side of the equation agrees with what consumers are saying,” said Quincy Krosby, Chief Equity Strategist at LPL Financial.

In corporate news, Peloton Interactive Inc. sank after UBS reaffirmed its sell rating on the home fitness company, citing negative user trends. Carnival Plc slumped as Morgan Stanley warned that the cruise vacation company’s shares could lose all their value if another demand shock hits. Bed Bath & Beyond Inc. plunged as the housewares retailer reported disappointing results.

Some of the major movements in the markets:

Shares

  • The S&P 500 was little changed at 4 p.m. PT
  • The Nasdaq 100 rose 0.2%
  • The Dow Jones Industrial Average rose 0.3%
  • The MSCI World index fell 0.6%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.5%
  • The euro fell 0.7% to settle at US$1.0441
  • The British pound fell 0.5% to settle at US$1.2117
  • The Japanese yen fell 0.3% to 136.59 per dollar

Obligations

  • The yield on 10-year Treasury bills fell eight basis points to 3.09%
  • Germany’s 10-year yield fell 11 basis points to 1.52%
  • The UK 10-year yield fell eight basis points to 2.38%

Goods

  • West Texas Intermediate crude fell 2.2% to US$109.31 a barrel
  • Gold futures are little changed

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