HomeBusinessThe sell-off continues as markets process new data and brace for PCE

The sell-off continues as markets process new data and brace for PCE

Angela Weiss/AFP via Getty Images

  • Stocks were lower again on Thursday, continuing the sell-off in the holiday-shortened week.

  • A revision to first-quarter GDP showed that economic growth was lower than initially reported, while inflation was also lower.

  • Markets are gearing up for the release of PCE inflation data on Friday.

U.S. stocks fell on Thursday as traders digested economic and labor market data ahead of the release of the Federal Reserve’s favorite inflation gauge on Friday.

The Dow Jones Industrial Average added to the big losses of the previous two sessions, led by a sharp decline in shares of Salesforce. The software company fell more than 16% after missing revenue estimates and giving weak guidance for the current quarter.

Economic growth for the first quarter was revised downwards from 1.6% initially reported to 1.3%. While growth was weaker in the first three months of the year, inflation was also cooler, raising hopes that the Fed would have some room to cut rates this year.

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“The downward revisions to economic growth and smaller downward revisions to inflation make the Fed slightly more likely to cut rates by September. With the economy running in low gear, a margin of undercapacity is emerging, and consumers are feeling less red,” said Bill Adams, chief economist at Comerica Bank.

The 10-year Treasury bond fell five basis points after spiking earlier this week following a series of weak bond auctions. The 10-year yield fell to 4.57% after rising above 4.6% on Wednesday.

Meanwhile, the number of Americans filing for unemployment benefits rose last week, suggesting the labor market is cooling and could bolster the Fed’s case for easing monetary policy. Jobless claims rose to 219,000, higher than estimates and about 3,000 higher than the previous week.

Markets are now preparing for the release of data on personal consumption expenditure, which is the Fed’s preferred measure of inflation. Economists expect the data to show inflation rose 2.7% year-on-year in April, while the core PCE rose 0.2%, up from 0.3% in March.

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Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Thursday:

Here’s what else is happening today:

In commodities, bonds and crypto:

  • West Texas Intermediate crude was 0.5% lower at $78.71 per barrel. Brent crude, the international benchmark, fell 0.7% to $82.92 per barrel.

  • Gold fell to $2,339 an ounce.

  • The yield on ten-year government bonds fell by five basis points to 4.57%.

  • Bitcoin fell 0.25% to $68,086.68.

Read the original article on Business Insider

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