Dow Jones, S&P 500 and Nasdaq fall as Powell says Fed in no ‘rush’ to cut rates

Vaccine stocks fell Thursday afternoon after Politico reported that Donald Trump anti-vaccine activist Robert F. Kennedy Jr. will appoint as head of the Department of Health and Human Services.

Shares of Moderna (MRNA) and Novavax (NVAX) both fell more than 5% after the report, while fellow vaccine maker Pfizer (PFE) also fell more than 2.5%.

Yahoo Finance’s Jennifer Schonberger reports:

Federal Reserve Chairman Jay Powell said the central bank does not need to be in a “rush” to cut rates because of the strength of the economy, and that the Fed will be “watching carefully” to ensure that certain inflation measures remain within acceptable limits. .

“The economy is not signaling that we need to rush to lower interest rates,” Powell said in prepared remarks for a speech in Dallas.

“The strength we see in the economy right now gives us the opportunity to approach our decisions carefully.”

Read more here.

A new Trump transaction is on the horizon.

Shares of government contractors fell on Thursday amid speculation that the new “DOGE” (Department of Government Efficiency) will look for areas to cut government spending. It is unclear exactly what action the newly formed department led by Elon Musk and Vivek Ramaswamy will take.

But Musk has already proposed eliminating hundreds of existing agencies and cutting the more than $6 trillion annual budget by $2 trillion.

And the market seems to be betting that some of these cuts will impact publicly traded government contractors. Shares of Science Applications International Corporation (SAIC), Booz Allen Hamilton (BAH), KBR (KBR) and Parsons Corporation (PSN) all fell 6% or more on Thursday.

Interestingly, shares of Lockheed Martin (LMT) fell more than 3%, which may serve as a reminder to investors that not all companies that work with the government are created equal. And for now, the market doesn’t see any major cuts in defense spending with Lockheed Martin.

October inflation figures this week show little progress toward the Fed’s 2% inflation target, raising questions about how deeply the Federal Reserve will cut rates in 2025.

On Wednesday, the ‘core’ consumer price index (CPI), which excludes the more volatile costs of food and gas, showed prices rose 3.3% in October for the third month in a row. Then on Thursday, the ‘core’ Producer Price Index (PPI) revealed that prices rose 3.1% in October, up from 2.8% the month before and above economists’ expectations for a 3% increase.

Taken together, the measurements contribute to an overall picture of persistent, persistent inflation within the economy. Economists don’t see the data changing the Fed’s outlook in December. And markets agree that the CME FedWatch Tool currently offers a nearly 80% chance that the Fed will cut rates by 25 basis points at its December meeting.

But the lack of recent progress on inflation could prompt the Fed to adjust its Summary of Economic Projections (SEP), which forecast the central bank would cut rates four times by 2025, or a total by one percentage point.

“PPI will not decisively change the Fed’s dovish bias, but it does make the mapping of the policy outlook more unclear,” National Financial Markets Economist Oren Klachkin wrote in a note to clients today. ‘We expect 75 [basis points] of cumulative Fed easing through 2025, but risks appear to be shifting to a more gradual pace of easing.”

Read more here.

According to a Reuters report, the administration of newly elected President Donald Trump plans to eliminate the $7,500 tax credit provided to consumers.

Shares of Ford ( F ), General Motors ( GM ) and Tesla ( TSLA ) all fell after the report.

Bitcoin (BTC-USD) pared earlier gains to hover above $88.00 per token at 12:30 PM ET.

The world’s largest cryptocurrency has been at the center of the Trump trade, which catalyzed moves in a range of assets following Donald Trump’s victory in the White House last week.

On Thursday morning, each token was trading around $91,000 after hitting new highs north of $93,000 in the previous session.

So far, Bitcoin is up about 100%.

Yahoo Finance’s Alexandra Canal reports:

Disney (DIS) CEO Bob Iger doesn’t think the company needs to engage in mergers and acquisitions to compete in streaming.

“We don’t really need more resources at this point, either from a distribution or content perspective, to thrive in [a] disruptive media world,” the executive told investors Thursday morning during the company’s fourth-quarter earnings call.

“In a sense, we are already consolidated,” he said, citing the acquisition of 21st Century Fox, which was announced in late 2017. “And while I think we will always look for opportunities opportunistically, as we have proven in the past, we certainly won’t shy away from that… We are already consolidated in many ways.”

Shares of Disney rose Thursday after the entertainment giant issued better-than-expected guidance and reported quarterly results that beat expectations.

Read more here.

Shares of Tapestry ( TPR ) rose to an 11-year high on Thursday after the parent company of Coach and Capri Holdings ( CPRI ) called off its merger plans.

The fashion companies jointly decided to abandon their $8.5 billion partnership, citing regulatory hurdles.

In a statement, Capri said that “it was unlikely that the closing condition required to obtain the necessary approvals from U.S. regulators would be met by the merger agreement deadline of February 10, 2025.”

Shares of Capri fell 2%, while shares of Tapestry rose as much as 11%.

Yahoo Finance’s Alexandra Canal reports:

Disney (DIS) on Thursday reported fiscal fourth-quarter earnings per share and revenue that topped Wall Street estimates, as its direct-to-consumer business built on recent momentum and turned a profit.

Strong expectations for the next two years also fueled investor optimism, sending shares up more than 10% in early trading after the results.

Read more here.

The major averages started mixed on Thursday as investors awaited a speech from Fed Chairman Jerome Powell while assessing a Republican victory in Congress.

The Dow Jones Industrial Average (^DJI) rose 0.2%, while the S&P 500 (^GSPC) rose slightly. The Nasdaq Composite (^IXIC) also rose 0.1%.

Republicans won control of the House of Representatives on Wednesday, completing their 2024 election “trifecta.”

Investors have been keeping an eye on the rising US Dollar Index (DX-Y.NYB) and the impact it could have on the markets. Commodities such as oil and gold, which are invoiced in dollars, have been under pressure in recent days.

Bitcoin (BTC-USD) remained above $91,000 on Thursday morning after climbing past $93,000 in the previous session.

The world’s largest cryptocurrency has been at the center of the Trump trade, which has catalyzed moves in a range of assets following Donald Trump’s White victory last week.

The token is up more than 30% since Election Day.

Initial unemployment claims fell by 4,000 to the lowest level since May, at 217,000 in the week ending November 9. The figures were less than the 220,000 claims economists had expected.