2024-10-31 21:14

Inflation at 2.1% by Fed's targeted measure; goal is 2% Employment cost index falls to lowest in more than 3 years Underlying inflation, election cloud 2025 rates outlook Oct 31 (Reuters) - With inflation now only just above the Federal Reserve's 2% target and wage pressures easing, U.S. central bankers are widely expected to cut short-term borrowing costs next week in an effort to keep the labor market from further cooling. But an uptick in underlying price pressures evident in data released on Thursday, what's likely to be a confusing monthly read on the labor market on Friday, and uncertainty over the outcome of the Nov. 5 U.S. presidential election make the road for further interest rate reductions in December and especially next year less clear. Inflation by the Fed's targeted measure, the year-over-year increase in the personal consumption expenditures price index, dropped to 2.1% in September, from 2.3% in August, a Commerce Department report on Thursday showed. The Fed aims for 2% inflation. A separate report from the Labor Department showed the broad wage-growth gauge known as the employment cost index rose 0.8% in the third quarter from the previous quarter, the smallest increase since the second quarter of 2021. A rise in labor costs was among the factors that had alarmed Fed policymakers in late 2021, prompting the central bank's pivot to tighter policy to head off an upward spiral of rising wages and prices. The fact that wage growth eased last quarter even as the economy expanded solidly may give Fed policymakers added confidence that inflation won't resurge, and a green light for interest rate cuts in their last two meetings of the year. "We view the data overall as suggesting that upside inflation risks from a strong economy and labor market remain to date muted, and while the Fed and investors will need to keep this under ongoing review given the strength in the data, it is fundamentally constructive for risk and for the 'soft landing,'" Evercore ISI Vice Chairman Krishna Guha wrote in a note. A soft landing refers to a scenario in which inflation cools but the labor market remains healthy and the economy avoids recession, a historically rare occurrence but one that so far has played out. Futures contracts settling to the Fed's policy rate ratified that view, putting the chances of a 25-basis-point cut at the central bank's Nov. 6-7 meeting at about 94%, and giving a second 25-basis-point cut in December about a 70% chance. The Fed last month lowered its policy rate by half of a percentage point to the 4.75%-5.00% range, in large part because policymakers felt that keeping it high even as inflation was falling could harm employment. ELECTION IMPACT The release on Friday of the Labor Department's monthly employment report is likely to show the unemployment rate held steady at 4.1% in October, economists polled by Reuters projected. They forecast that 113,000 jobs were added in October, which would be a sharp slowdown from September. Fed policymakers, however, are expected to take little signal from that employment data, because recent hurricanes and an ongoing strike at Boeing likely subtracted as much as 100,000 jobs in the month. That impact will be seen as only temporary rather than a sudden deterioration in the labor market. Other data released on Thursday, however, may mitigate the confidence in a benign inflation trajectory. Underlying price pressures, as tracked by the core PCE price index that excludes volatile food and energy items, ticked up to 2.7% from a year earlier, higher than the 2.6% economists had expected and matching the prior month's increase. The Fed watches core PCE closely to help forecast where inflation is heading, and further increases could raise doubts about the wisdom of easing monetary policy further. "We believe the Fed will pause any rate cuts in December amid fears about a reacceleration of inflation," Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, wrote in a note. And if former U.S. President Donald Trump retakes the White House and voters return full control of Congress to his fellow Republicans on Tuesday, as betting markets project, promised tariff increases, tax cuts and mass deportations of migrants could bolster wage and inflation pressures, analysts say. Financial markets in recent weeks have been pricing in higher inflation in five years. "The election poses upside risks to the baseline forecast for medium-term wage growth," Bernard Yaros, lead U.S. economist at Oxford Economics, wrote in a note. Sign up here. https://www.reuters.com/markets/rates-bonds/traders-stick-bets-25-bps-fed-rate-cuts-nov-dec-2024-10-31/

2024-10-31 20:42

Meta Platforms, Microsoft drag megacaps lower Amazon and Apple post quarterly revenue beat Estee Lauder shares drop to record low September PCE data in line with estimates Indexes down: Dow 0.9%, S&P 1.86%, Nasdaq 2.76% Oct 31 (Reuters) - All three U.S. stock indexes closed lower on Thursday after Microsoft and Meta Platforms highlighted growing artificial intelligence costs that could hit their earnings, curbing enthusiasm for megacaps that have fueled the market rally this year. Shares of Facebook-owner Meta Platforms (META.O) , opens new tab slipped 4.1% and Microsoft (MSFT.O) , opens new tab fell 6%, despite both companies beating earnings estimates in results reported after the bell on Wednesday. Among other so-called Magnificent Seven megacap technology companies, Amazon.com (AMZN.O) , opens new tab and Apple (AAPL.O) , opens new tab reported quarterly results after the market close. Amazon beat revenue estimates, boosted by strong growth in its cloud services unit. Apple also beat revenue and profit expectations as iPhone sales grew. Shares of Alphabet (GOOGL.O) , opens new tab, which reported on Tuesday, fell 1.9%. "You had three of the Magnificent Seven all say they basically have open-ended budgets for AI spend and investors don't like to hear that," said Carol Schleif, chief investment officer at BMO Family Office. "The intermediate and longer-term implications of this buildout are really important for U.S. long-term growth and long-term productivity. ... In the short run, investors are asking where's the profit from it?" Microsoft and Meta both said capital expenses were growing due to AI investments, which could reduce profitability. The Dow Jones Industrial Average (.DJI) , opens new tab fell 378.08 points, or 0.90%, to 41,763.46. The S&P 500 (.SPX) , opens new tab lost 108.22 points, or 1.86%, at 5,705.45 and the Nasdaq Composite (.IXIC) , opens new tab dropped 512.78 points, or 2.76%, to 18,095.15. The Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation metric, rose 0.2% in September, in line with economists' expectations. However, the core figure was 2.7% year-over-year, slightly above the 2.6% forecast, while consumer spending increased a little more than expected. After the data, traders stuck to bets for a 25-basis-point rate reduction in the Fed's Nov. 6-7 meeting. "We do expect them to cut by a quarter next week because there is nothing in the data this week that should throw them off of that," Schleif said. Information technology (.SPLRCT) , opens new tab led declines among sectors, but upbeat results from ConocoPhillips (COP.N) , opens new tab and Entergy (ETR.N) , opens new tab lifted energy (.SPNY) , opens new tab and utilities (.SPLRCU) , opens new tab. An index of chip stocks (.SOX) , opens new tab fell 4%, led by a 17.4% plunge in Monolithic Power Systems (MPWR.O) , opens new tab shares after the maker of power control products and semiconductors used in vehicles reported its results. Nvidia (NVDA.O) , opens new tab also dropped 4.7%. The VIX (.VIX) , opens new tab, Wall Street's "fear gauge," ticked up as investors braced for more volatility in the next few weeks from corporate results and the Nov. 5 U.S. presidential election followed by the Fed's policy-setting meeting. Estee Lauder (EL.N) , opens new tab posted its worst day on record, dropping 20.9% after the cosmetics company withdrew its 2025 annual forecasts. Shares of Uber Technologies (UBER.N) , opens new tab fell 9.3% after the ride-hailing company forecast fourth-quarter gross bookings below expectations. Intel (INTC.O) , opens new tab reported earnings after the close that were weighed down by impairment and restructuring charges. Declining issues outnumbered advancers by a 2.66-to-1 ratio on the NYSE. There were 106 new highs and 97 new lows on the NYSE. The S&P 500 posted 24 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 59 new highs and 159 new lows. Sign up here. https://www.reuters.com/markets/us/futures-tumble-meta-microsoft-cost-warnings-highlight-ai-trade-risks-2024-10-31/

2024-10-31 20:31

TSX ends down 1.43% at 24,156.87 For the month, the TSX gains 0.65% Materials group falls 2.4% as gold drops Tech loses 2.8 with Open Text down 11.1% Oct 31 (Reuters) - Canada's main stock index gave back much of its monthly gain on Thursday as it fell to a three-week low in a wider selloff that was led by technology shares. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) , opens new tab ended down 350.92 points, or 1.43%, at 24,156.87, its lowest closing level since Oct. 8. For the month, the index was up 0.65%, its fourth straight monthly increase. "The run that the market's had lately ... a pullback is expected," said Michael Constantino, CEO of Webull Canada. U.S. stocks slumped after Microsoft and Meta Platforms highlighted growing artificial intelligence costs that could affect their earnings, curbing enthusiasm for megacap stocks that have fueled the market rally this year. "It's unusual for the Canadian market to totally detach from the U.S. on a short-term basis," said Brian Madden, chief investment officer at First Avenue Investment Counsel. "So, selling pressure in the U.S. taints the sentiment in Canada." The materials group, which includes fertilizer companies and metal mining shares, fell 2.4% as gold pulled back from a record high. Still, the index has climbed more than 30% since the start of 2024. "We're still seeing some client interest in financials and materials," Webull Canada's Constantino said. "They've been winners all year so clients are still picking their spots." Financials were down 1.4% on Thursday, while technology ended 2.8% lower as Open Text Corp (OTEX.TO) , opens new tab lost 11.1% after reporting quarterly revenue that missed analysts' estimates. Energy fell 1.2%, with Cenovus Energy Inc (CVE.TO) , opens new tab down 3.4% after posting a 56% slump in third-quarter profit due to a decline in production. Bausch Health Companies Inc (BHC.TO) , opens new tab was a bright spot, with its shares jumping 12.7% after the drugmaker reported stronger-than-expected third-quarter earnings. Sign up here. https://www.reuters.com/markets/tsx-futures-fall-ahead-domestic-gdp-data-us-earnings-weigh-2024-10-31/

2024-10-31 20:14

Average Q3 oil, gas sales price falls from year earlier Coterra raises 2024 production forecast by 1% Its Q3 oil production rises by 22% Oct 31 (Reuters) - U.S. oil and gas producer Coterra Energy (CTRA.N) , opens new tab missed Wall Street estimates for third-quarter profit on Thursday due to weaker commodity prices. Benchmark natural gas prices remained subdued during much of the quarter, hurt by high storage levels and tepid demand. The U.S. Energy Information Administration expects U.S. gas production to decline in 2024, the first time since 2020, as producers like Coterra have reduced their output after prices touched multi-decade lows. The company's average sales price for natural gas, excluding hedges, fell to $1.30 per thousand cubic feet (mcf) from $1.80 per mcf a year earlier. Oil prices also fell 8.4% to $74.04 per barrel on demand woes. Total production fell marginally to 669,100 barrels of oil equivalent per day (boepd) from 670,300 boepd, as declines in natural gas output were mostly offset by a 22.2% rise in oil production. Coterra has reallocated resources to oil-heavy Permian and Anadarko basins from the country's largest gas producing region, Marcellus shale, following the slump in natural gas prices this year. The company, however, raised 2024 production forecast to a range of 660,000 to 675,000 boepd, up 1% at midpoint compared to its earlier projections, primarily backed by strong oil production. Its shares rose 1.8% in after-market trade. The company also forecast oil production to grow at 5% annually for the next two years. But it said total equivalent production growth would be in the range of zero to 5% until 2026. Coterra's third-quarter net income fell 22% to $252 million, compared to the year-ago quarter. Its adjusted profit of 32 cents per share came in below market estimate of 34 cents, according to data compiled by LSEG. Sign up here. https://www.reuters.com/business/energy/coterra-energy-posts-lower-quarterly-profit-2024-10-31/

2024-10-31 19:34

MADRID, Oct 31 (Reuters) - LaLiga and its clubs will help raise funds for the Red Cross to support those affected by the flash floods which have killed at least 158 people in Spain by publicising a campaign during match broadcasts this weekend and through their social media accounts. "Spain's professional football joins the condolences and expresses its solidarity with the families of the victims and the missing," LaLiga said in a statement on Thursday. Real Madrid announced they would also collaborate with the Red Cross and donate one million euros ($1.09 million). "The Real Madrid Foundation and the Red Cross have today launched a fundraising campaign to support those affected by the storm and the club have decide to support this campaign with a donation of one million euros to help the many families who are in a critical situation and need all our help and solidarity," the Spanish champions said in a statement. After the Spanish FA postponed seven midweek Cup ties and all games scheduled for Valencia's eastern region this weekend, it asked competition organisers to observe a minute's silence before matches that will be played as a tribute to the victims. Six postponed Copa del Rey games have been rescheduled for next week, leaving Real Sociedad's match against Jove Espanyol in Alicante as the only tie without a new fixture date. LaLiga asked the 10 affected clubs in the top two divisions to submit a proposal for new dates before next Tuesday. Saturday's LaLiga match between Valencia and visitors Real Madrid plus Villarreal's clash with Rayo Vallecano are among the games postponed, as Valencia made the Mestalla stadium available as a drop-off point for donations of food and essential items. ($1 = 0.9210 euros) Sign up here. https://www.reuters.com/sports/soccer/laliga-clubs-help-raise-money-victims-spains-flash-floods-2024-10-31/

2024-10-31 19:14

Loonie touches a 12-week low at 1.3945 Currency weakens 2.8% in October August GDP was flat Bond yields ease across the curve TORONTO, Oct 31 (Reuters) - The Canadian dollar steadied near a 12-week low against its U.S. counterpart on Thursday and posted its biggest monthly decline in more than two years, as the domestic economy stalled in August and investors globally grew risk averse. The loonie was trading nearly unchanged at 1.3909 to the U.S. dollar, or 71.90 U.S. cents, after touching its weakest intraday level since Aug. 5 at 1.3945. For the month of October, the currency was down 2.8%, its biggest monthly decline since September 2022. "The Canadian dollar was looking like it might carve out another bottom this morning ... but Day Two of the gilt market panic following the latest UK budget then took hold, freaking out the stock market and risk-sensitive currencies like CAD," Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull. British government bond prices tumbled for a second straight day on Thursday as investors judged finance minister Rachel Reeves' first budget would boost inflation and cause the Bank of England to cut interest rates more slowly. U.S. stocks slumped after Microsoft and Meta Platforms highlighted growing artificial intelligence costs that could affect their earnings, curbing enthusiasm for megacap stocks that have fueled the market rally this year. Canada is a major producer of commodities such as oil so the loonie tends to be sensitive to shifts in risk appetite. The Canadian economy is likely to miss the Bank of Canada's revised third-quarter forecast of annualized 1.5% growth after a slew of temporary factors led to a flat reading for gross domestic product in August. Economic growth for July was revised downwards to 0.1% from 0.2%, while preliminary data showed growth rebounding to 0.3% in September. Canadian government bond yields moved lower across the curve, with the 10-year down 3.4 basis points at 3.230%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-posts-biggest-monthly-decline-two-years-2024-10-31/