Wall Street Stocks Dip Ahead of Powell Comments, Jobs Report

By | November 30, 2022

U.S. stocks fell on Tuesday, but moves were modest as investors avoided making big bets ahead of Federal Reserve Chair Jay Powell’s comments on Wednesday and the expected November jobs report. to be released on Friday.

The S&P 500, Wall Street’s benchmark, fell 0.2 percent in the New York session, while the high-tech Nasdaq Composite lost 0.6 percent.

Powell will speak at The Brookings Institution amid uncertainty about the way forward for US monetary policy as some signs of cooling inflation emerge. The uncertainty was evident in the minutes of the central bank’s November meeting, as well as in recent comments from officials including New York Fed President John Williams, St Louis President James Bullard and San Francisco President Mary Daly.

Futures traders have priced in a roughly 70% chance that the Fed will deliver a 0.5 percentage point hike at its December meeting, after four consecutive 75 percentage point moves.

“With Powell coming in tomorrow and jobs coming in, people are putting off big moves,” said Lou Brien, strategist at DRW Trading.

The labor department’s employment report on Friday is expected to show the US added 200,000 jobs in November, according to a Bloomberg survey of economists, a slowdown from the previous month. Williams of the New York Fed warned on Monday that US unemployment could rise from its current level of 3.7% to between 4.5% and 5% by the end of next year.

The weak performance of US stocks contrasted with Chinese stocks, which rallied sharply on Tuesday, as investors bet that Beijing would continue to ease its tough Covid-19 policies despite the government’s commitment to maintain its tough measures.

Hong Kong’s Hang Seng Index rose 5.2 percent after falling 1.6 percent in the previous session, while China’s CSI 300 rose 3.1 percent.

The measures come after the imposition of a new round of business closures and quarantines of close contacts of the coronavirus in Shanghai, and as the country reels from widespread demonstrations against President Xi Jinping’s strict lockdown measures.

“The direction of reopening is very clear, in our opinion, and we don’t think the government will double down on pandemic control measures,” said Xiangrong Yu, an analyst at Citi.

“We maintain our basic argument that the reopening will gain momentum after the National People’s Congress [in March] next year, and we see a greater risk of an accelerated reopening,” he said.

The line chart of Hong Kong-listed stocks has rebounded since late October, showing the Hang Seng Index

While some of investors’ “early loading” of low-rated Chinese stocks has reversed thanks to “risky” market sentiment, China is likely to maintain its zero Covid measures until at least next year, and despite the protests, Mitul Kotecha said. , head of emerging markets strategy at TD Securities.

“Ultimately, there is still nothing here that changes the perspective of investors,” added Kotecha.

Elsewhere in equity markets, Europe’s regional Stoxx 600 fell 0.1 percent, having lost 0.6 percent on Monday, while London’s FTSE 100 rose 0.5 percent.

The two-year Treasury yield, which moves with interest rate expectations, rose 0.04 percentage points to 4.48%, while the benchmark 10-year yield gained 0.07 percentage points to 3. 75%.

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