US benchmark equity indexes concluded the trading day lower on Thursday as traders analyzed remarks made by Federal Reserve Chair Jerome Powell. The S&P 500 and the Nasdaq Composite both recorded a drop of 0.6%, settling at 5,949.2 and 19,107.7, respectively. The Dow Jones Industrial Average followed suit, losing 0.5% to reach 43,750.9.
The industrials sector faced the most significant decline, with only the energy and technology sectors managing to close higher. Powell stated that the US economy is 'not sending any signals that we need to be in a hurry' in terms of easing monetary policy. 'The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully,' he articulated.
He further noted, 'Ultimately, the path of the policy rate will depend on how the incoming data and the economic outlook evolve.' Inflation is nearing the 2% longer-run target, yet Powell emphasized, 'but it is not there yet.' He highlighted the need for vigilance regarding the gradual decline in housing services inflation, which has yet to fully normalize. In comments on the broader economic landscape, Fed Governor Adriana Kugler remarked that disinflation in the US has decelerated, citing 'stubborn' housing inflation and price pressures in various categories, which may hinder progress toward achieving price stability. In recent updates, the Federal Open Market Committee (FOMC) decreased its key lending rate by 25 basis points last week, following a more substantial 50-basis-point reduction in September. The yield on US two-year bonds climbed 7.6 basis points to reach 4.36% on Thursday, while the 10-year rate remained relatively unchanged at 4.45%. From an economic perspective, US producer price growth accelerated sequentially in October, as reported by the Bureau of Labor Statistics.
Data from the BLS indicated that consumer inflation in the US matched market expectations last month. Using the CME FedWatch tool, the probability of the FOMC reducing interest rates by an additional 25 basis points next month fell to 59% from 83% the previous day, with the likelihood of rates staying the same rising to 41%. Furthermore, weekly applications for unemployment insurance plummeted to their lowest level since May, along with a reduction in continuing claims, as per US government statistics. In the commodities market, West Texas Intermediate crude oil saw a modest increment of 0.3%, reaching $68.65 per barrel on Thursday.
Additionally, US commercial crude stockpiles grew more than anticipated last week, reflecting on government data. The International Energy Agency has revised its 2024 global oil demand forecasts upward as consumption patterns in advanced economies showed a rebound during the third quarter. However, the Organization of the Petroleum Exporting Countries has continued to reduce its global oil demand projections for 2024 and 2025 for the fourth consecutive month. On the corporate front, shares of Super Micro Computer ($SMCI) tumbled 11%, marking the largest decline on the Nasdaq and the second biggest drop on the S&P 500.
The artificial intelligence server manufacturer announced it could not submit its quarterly report for the period ended Sept. 30 in a timely manner. Shares of electric vehicle manufacturer Tesla ($TSLA) also faced a decline of 5.8% on Thursday, making it the second-worst performer on the Nasdaq. Walt Disney ($DIS) reported fiscal fourth-quarter results that surpassed market expectations, driven largely by its streaming initiatives.
The media giant forecasted adjusted earnings growth for fiscal 2025 year over year, leading to a 6.2% rise in its shares, making it the leading performer on the Dow and one of the top stocks on the S&P 500. In merger news, Tapestry ($TPR) halted its proposed acquisition of Capri ($CPRI), which owns Michael Kors and Versace, due to uncertainties surrounding regulatory approvals.
Shares for Tapestry surged nearly 13%, becoming the best performer on the S&P 500, while Capri shares increased by 4.4%. Gold prices experienced a decline of 0.6%, settling at $2,570.60 per troy ounce, and silver prices dipped by 0.4% to $30.55 per ounce..