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US stocks paused near record highs on Wednesday as investors waited for a reading on the Federal Reserve’s favorite inflation gauge to provide clues to the path of interest rates.
S&P 500 futures (ES=F) and Dow Jones Industrial Average futures (YM=F) were little changed, coming off fresh all-time highs for the indexes. Contracts on the tech-heavy Nasdaq 100 (NQ=F) fell 0.3%.
The mood is muted in the wind-down to the Thanksgiving holiday, which will see markets shut on Thursday and close early on Friday. But the Fed is taking the fore again after being eclipsed somewhat by debate over the impact of Donald Trump’s tariff plans and cabinet choices.
The October print of its preferred inflation gauge, the Personal Consumption Expenditures index, is due for release on Wednesday morning. Focus is on whether inflation has stalled, as some officials believe, and minutes from the Fed’s last meeting suggested a cautious stance on interest-rate cuts.
Economists expect annual “core” PCE — which excludes food and energy — to have clocked in at 2.8% in October, up from the 2.7% seen in September. A print matching those expectations will likely weigh on bets for a rate cut in December. Traders currently see a roughly 34% chance the Fed holds rates steady at that meeting, up from a roughly 24% a month before, per the CME FedWatch Tool.
Also out Wednesday, the second estimate of third quarter GDP was unchanged, showing the US economy grew at an annualized rate of 2.8% in the period. Meanwhile, weekly jobless claims continued to move lower with 213,000 unemployment claims filed in the week ending Nov. 23, down from 215,000 the week prior.
Trump on Tuesday tapped Jamieson Greer — a veteran of his first term — as US trade representative. Given Greer was heavily involved in Trump’s original China tariffs, Wall Street is assessing what his role could mean for the big new tariffs promised for the US’s top trading partners.
On the corporate front, Dell (DELL) shares sank over 10% after quarterly revenue fell short amid flagging PC demand. Peer HP’s (HPQ) stock also fell post-earnings, down 8%.
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Weekly jobless claims fall, GDP steady
Weekly jobless claims rose less than expected last week, and hit a seven-month low, as the impact of labor strikes and severe weather continued to abate.
New data from the Department of Labor showed 213,000 initial jobless claims were filed in the week ending Nov. 23, down from the 215,000 the week prior and below the 215,000 economists had expected.
Meanwhile, the number of continuing applications for unemployment benefits hit 1.9 million, up 9,000 from the week prior and the highest level since November 2021.
Elsewhere in economic data, the second estimate of third quarter GDP came in unchanged, once again showing the US economy grew at annualized rate of 2.8%.
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Good morning. Here’s what’s happening today.
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About those potential Trump tariffs
Shares of automakers General Motors (GM) and Ford (F) were throttled on Tuesday following Trump’s tariffs threats toward Mexico, China and Canada.
GM lost 9%, while Ford dropped 3% as both companies have a strong presence in Mexico.
But automakers aren’t the only companies that stand to be hurt by tariffs, of course.
Think computers and T-shirts!
Here’s what HP Inc. (HPQ) CEO Enrique Lores and Abercrombie & Fitch (ANF) CEO Fran Horowitz told me on the tariff topic.
Enrique Lores
“Some of that [cost of potential tariffs] will have to go to consumers given what is the overall margin that we have in the categories. But again, we need to wait and see what the final tariffs are for us to define what the exact plan is going to be.”
Fran Horowitz
“When we understand truly what’s happening, we will have to make some adjustments, and we will adjust accordingly,” Horowitz said. “It’s exactly what we did in 2018 when we had the same challenge. In 2024 we will not be receiving more than 5% or 6% of our US receipts from China. We’re taking a look at it country by country, but the agility that we’ve built into our supply chain is really what’s going to help us manage through this.”
