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01/08/24
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Wall Street Falls on Economy Worries Despite Optimism About Rate Cuts
On Thursday, stocks on Wall Street fell, despite the increased probability of a rate cut in September as well as a strong outlook from Meta Platforms, as data fueled fears about economic activity slowing.
The NASDAQ Composite dropped 156 points, or 0.9%, the S&P 500 declined 35 points, or 0.6%, and the Dow Jones Industrial Average fell 462 points, or 1.13%.
The drop came as first-time jobless claims rose to 249K for the week that ended on July 27, higher than anticipated, while the July ISM manufacturing index was at 46.8, lower than the forecast of 48.2. The data adds to worries about economic activity slowing.
The Fed did not change interest rates at the end of a 2-day meeting on Wednesday, as generally expected.
Chair Jerome Powell did, however, acknowledge that progress had been made in pushing inflation down and easing the labor market. These factors both set the stage for a possible rate cut in September. Powell specifically mentioned the possibility of a September rate cut, although he cautioned that it would depend on positive data.
Before its September meeting, the Fed will have fresh labor market and inflation data to consider. Markets are almost entirely pricing in a 0.25% cut in September.
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