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Wall Street Heads to Open Lower as Inflation Data Stirs Interest Rate Hike Concerns By Reuters

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© Reuters. FILE PHOTO: A trader works on the New York Stock Exchange (NYSE) in New York City, US, November 29, 2022. REUTERS/Brendan McDiarmid

Written by Sruthi Shankar and Anika Biswas

(Reuters) – Wall Street’s benchmark indexes were set to open lower on Friday after a higher-than-expected rise in monthly producer prices stoked fears that the Federal Reserve may stick to interest rate hikes for a longer period.

The Labor Department report showed producer prices rose 7.4% last month year-on-year, compared to economists’ expectations of 7.2%, despite producer prices falling 8% in October.

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Core producer prices, which exclude the volatile food and energy components, jumped 6.2% compared to an estimate for a 5.9% rise.

“It’s disappointing and shows we’re stuck in a vicious cycle of inflation and I’m not surprised that the market is selling as it is now,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield.

Consumer price data for November, due on Tuesday, will provide more clues to the central bank’s monetary tightening plans next week.

Most of the big tech and growth stocks like Alphabet (NASDAQ:) Inc, Nvidia (NASDAQ:: Corp), Tesla (NASDAQ:: Inc), and Amazon.com (NASDAQ::) fell between 0.3% and 1.3% in pre-market trading like the US. Treasury yields rose after the data. [US/]

The producer price data comes on the heels of strong monthly jobs reports and service sector activity last week, adding to concerns about sharp interest rate increases.

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Expectations of a 50bp rate hike next week by the Fed held at roughly the same level as the report also showed that the underlying trend in inflation has moderated.

The US central bank raised its policy rates by 75 basis points for the four consecutive months through November to 3.75%-4.00%.

Wall Street’s major indexes came under pressure in December after two straight months of gains amid fears of a possible recession next year fueled by an extended US interest rate hike as well as dovish comments from top executives.

US stocks snapped recent losses on Thursday after data showed that initial jobless claims rose slightly last week, pointing to a worsening labor market.

The University of Michigan’s preliminary reading in December is expected to improve on the overall index of consumer sentiment after declining in November. Data due at 10:00 a.m. ET.

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At 8:45 a.m. ET, it was down 154 points, or 0.46%, down 22 points, or 0.55%, and down 72.75 points, or 0.62%.

Netflix Inc (NASDAQ: 2.2%) rose after that Wells Fargo (NYSE: ) upgraded the streaming giant’s stock to “overweight” from “equal weight,” while carvana Co (NYSE::) fell 8% after Jefferies cut its price target for the used-car retailer’s stock in half.

Broadcom (NASDAQ: Inc) stock rose 2.8% after the chipmaker forecast revenue for the current quarter was higher than Wall Street estimates.

Lululemon Athletica (NASDAQ:) fell 7.2% after the sportswear maker forecast lower-than-expected earnings and earnings for the holiday quarter.

US-listed Chinese stocks rose on optimism about the pivot of China’s policy on COVID. Internet company Bilibili (NASDAQ:) Inc advanced 3.6%, while search engine giant Baidu Inc (NASDAQ:) jumped 2.3%.

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.