Wall Street Stocks Slide As Rate Cut Hopes Diminish

London, (APP - UrduPoint / Pakistan Point News - 16th Mar, 2024) Wall Street's main stock indices pulled back Friday after a slew of data this week dampened hopes for several rate cuts from the Federal Reserve this year, while European equities held near recent highs on expectations of coming interest rate cuts on their side of the Atlantic.

Oil and cryptocurrency bitcoin fell on profit taking after making strong gains earlier in the week.

Paris and Frankfurt ended little changed Friday and up sharply for the week, holding just below the record intra-day highs they touched Thursday.

The shares gained on expectations that Europe's stuttering growth might enable the ECB to start cutting interest rates this summer, even if the Fed doesn't.

"We're seeing continued rotation out of US markets," said Chris Beauchamp, an analyst at IG.com. "Recent inflation prints and economic data have added to the cautious outlook, but the ECB's shift to earlier rate cuts seems to have lit a fresh fire under European stocks, which remain cheap by comparison to the US."

Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said "the ECB doesn't need to wait for the Fed," and added that the Norwegian and Swiss central banks could cut rates in the coming weeks.

Even if neither country uses the euro, their moves would underscore that European monetary policy doesn't necessarily have to take its cue from the Fed.

Meanwhile in the US, a sharper-than-expected jump in US wholesale prices sent US shares lower Thursday and those inflation concerns carried over into Friday.

All three main Wall Street indexes were lower at midday Friday, with the tech-heavy Nasdaq down more than one percent. For the week, shares were little changed.

"This week's inflation data reinforced ideas that the Federal Reserve could take longer to cut rates, and also raised concerns about the impact of both inflation and extended high borrowing costs on the economy," said Charles Schwab analyst Joe Mazzola.

Eyes next week turn to the Fed's latest Federal Open Market Committee (FOMC) meeting.

Thursday's surprisingly large bump in February's US producer price index followed faster-than-expected consumer prices earlier in the week and overshadowed separate figures pointing to a slowdown in retail sales.

- Fed outlook -

While Fed officials are not expected to move on rates next week, their post-meeting statement will be pored over for an idea of their thinking, with many -- including boss Jerome Powell -- having warned they will only cut when confident inflation is under control.

"Fed policy makers are expected to keep rates unchanged but will issue fresh economic and rate projections for the first time since December," said Charles Schwab's Mazzola.

London fell slighly Friday, but Vodafone shares rose almost 6 percent after the UK-based telecoms company sold its Italian unit to Swisscom for 8 billion Euros ($8.7 billion)

In cryptocurrency trading Friday, bitcoin was at $67,699, after spiking on Thursday to an all-time high of $73,797.

"After bitcoin was hitting all-time highs almost on an hourly basis in recent days, investors have been profit-taking," said Nigel Green, head of financial advisory firm deVere Group.

The unit has rocketed about 50 percent higher since the middle of February as rate-cut hopes weighed on the Dollar. Bitcoin has also benefitted from surging interest caused by US authorities' decision to allow greater trading accessibility.

- Key figures around 1630 GMT -

New York - Dow: DOWN 0.5 percent at 38,696.73 points

New York - S&P 500: DOWN 0.7 percent at 5,113.24

New York - Nasdaq Composite: DOWN 1.0 percent at 15,963.24

London - FTSE 100: DOWN 0.2 percent at 7,727.42 (close)

Paris - CAC 40: UP less than 0.1 percent at 8,164.35 (close)

Frankfurt - DAX: DOWN less than 0.1 percent at 17,936.65 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,986.02 (close)

Tokyo - Nikkei 225: DOWN 0.3 percent at 38,707.64 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 16,720.89 (close)

Shanghai - Composite: UP 0.5 percent at 3,054.64 (close)

Dollar/yen: UP at 149.05 Yen from 148.28 yen on Thursday

Euro/dollar: UNCHANGED at $1.0889

Pound/dollar: DOWN at $1.2736 from $1.2752

Euro/pound: UP at 85.50 pence from 85.36 pence

West Texas Intermediate: DOWN 0.2 percent at $81.13 per barrel

Brent North Sea Crude: DOWN 0.1 percent at $85.33 per barrel