US STOCKS-Wall St sinks on Powell rate-cut caution, Trump cabinet picks

Monster Beverage

15/11/2024 21:00

(Updates to close)
    By Sinéad Carew and Lisa Pauline Mattackal
       Nov 15 (Reuters) - 
    Wall Street's main indexes closed lower on Friday after
Federal Reserve Chair Jerome Powell pointed to a slower pace of
interest-rate cuts and investors reacted to cabinet selections
by U.S. President-elect Donald Trump.
    Powell on Thursday cited ongoing economic growth, a solid
job market, and inflation above the U.S. central bank's 2%
target as reasons it can afford to be careful with the pace and
scope of future rate cuts.
    Traders increased bets the Fed will not change rates at its
December meeting, pricing in a roughly 42% chance, versus
roughly 14% a month ago, according to the CME FedWatch tool.
They also dialed back expectations for easing in 2025.
    This view was reinforced by Friday's economic data showing
U.S. retail sales rose slightly more than expected in October.
Import prices also rebounded and data released on Wednesday and
Thursday showed sticky inflation.
   
    "In the last 48 hours we've had some pretty big changes, not
just from the election but from economic data that was better
than expected and Powell speaking about not having to be as
aggressive on interest rate cuts," said Adam Rich, deputy chief
investment officer for Vaughan Nelson in Houston.
    "Market expectations for interest rate cuts have come down
materially and also the market is readjusting after a pretty
bullish reaction to the U.S. election."
    Friday's sell-off ended a week in which market focus shifted
from the U.S. election win by Trump, seen as a pro-business
choice, to worries about the rate cut path and potential
inflation risks under the next administration.
    "Volumes are elevated today. People are taking profits
because this has been a good month. U.S. stocks have been doing
well this month. But it's not blanket profit taking," said John
Augustine, chief investment officer at Huntington National Bank,
pointing to gains in the Utilities sector  .SPLRCU . "This
suggests more of a rotation."
        Stocks of vaccine makers and packaged food companies
also dipped after Trump said he would nominate Robert F Kennedy
Jr, who has spread misinformation on vaccines and criticized
ultra-processed foods, to head the Department of Health and
Human Services. 
    According to preliminary data, the S&P 500  .SPX  lost 78.65
points, or 1.32%, to end at 5,870.52 points, while the Nasdaq
Composite  .IXIC  lost 429.11 points, or 2.25%, to 18,678.54.
The Dow Jones Industrial Average  .DJI  fell 306.30 points, or
0.70%, to 43,444.56.
    Adding to Friday's volatility was the regular expiration of
stock and index options, according to Vaughan Nelson's Rich. 
    Brent Kochuba, founder of financial insights company
SpotGamma, said Friday's stock market weakness was partly due to
investors being ill-prepared for a pullback.
    CBOE's volatility index  .VIX , also known as Wall Street's
fear gauge, hit 17.55 earlier on Friday, the highest since
Election Day on Nov. 5.
    Shares of defense firms and government contractors also
fell, partly on concerns about Trump's picks earlier this week
to head a new Department of Government Efficiency.
    Among the S&P 500's 11 major industry sectors information
technology  .SPLRCT  was the day's biggest loser.
    Also, the Philadelphia SE Semiconductor index  .SOX  fell
sharply with Applied Materials  AMAT.O  tumbling after the U.S.
maker of chip-manufacturing equipment forecast first-quarter
revenue below Wall Street estimates. 
    Shares in Moderna  MRNA.O  and Pfizer  PFE.N  sank, weighing
on healthcare  .SPXHC , which hit its lowest since May. 
    The Consumer staples index  .SPLRCS  was also hurt by the
nomination news, with stocks including Monster Beverage, Lamb
Weston  LW.N  and PepsiCo  PEP.O  falling. 
    The small-cap Russell 2000 index  .RUT  fell for its fourth
consecutive session. 

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Monthly change in US retail sales    https://reut.rs/4i10zGa
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 (Reporting by Sinéad Carew, Saqib Iqbal Ahmed in New York, Lisa
Mattackal and Purvi Agarwal in Bengaluru; Editing by Devika
Syamnath and Richard Chang)
 ((sinead.carew@thomsonreuters.com; +13322191897))