- Stocks slipped on Wednesday as traders watched the rise in US Treasury yields.
- Odds of a rate cut in September have dwindled to less than 50%, from 60% last week, according to the CME FedWatch tool.
- Shares of Marathon Oil were up more than 11% on news of a $17 billion acquisition by ConocoPhillips.
Stocks dipped on Wednesday — with the Nasdaq falling from a record — as investors watched bond yields move higher for a second day this week, with the 10-year Treasury continuing to climb above 4.5%.
US bond yields are hovering around the highest level in about four weeks following a weak government bond auction Tuesday, as well as waning rate-cut hopes amid the latest inflation data.
According to the CMEFedWatch Tool, markets see the odds of a rate cut from the Federal Reserve at the September policy meeting at about 43%, down from around 60% last week. Manufacturing and services data last week sparked a fresh inflation scare, while hawkish comments from Fed officials since then have solidified higher-for-longer bets.
Friday will bring the latest personal consumption expenditures report, the Fed's favored method of gauging the pace of inflation. Markets are broadly expecting the data to be in-line with the previous month at 2.7%. The report will be key in setting expectations what the Fed may do later this year.
"We do not expect any major upward or downward surprises in Friday's PCE as most of the recent economic data is indicative of an economy that has settled into a nice long-term simmer of not too hot and not too cold," Carol Schleif, CIO of BMO Family Office, said Wednesday. "That said, getting to the Fed's 2% target is apt to be a bumpy landing."
Shares of Marathon Oil jumped 11% on news that the oil company would be acquired by larger rival ConocoPhillips for $17 billion. Meanwhile, shares of American Airlines dropped more than 9% after it revised guidance down for the quarter.
Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Wednesday:
- S&P 500: 5,265.70, down 0.8%
- Dow Jones Industrial Average: 38,467.10, down 1% (382 points)
- Nasdaq Composite: 16,892.75, down 0.7%
Here's what else is going on today:
- A study found GPT-4 is better than humans at financial analysis.
- The promise of AI revolution has added $230 billion to the wealth of seven US tech billionaires this year.
- UBS raised its price target for the S&P 500 again as recession risk fades and earnings growth looks poised to increase.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil ticked 0.4% higher to $80.19 a barrel. Brent crude, the international benchmark, rose 0.4 % to $85.56 a barrel.
- Gold slipped to $2,360 per ounce.
- The 10-year Treasury yield increased three basis points to 4.572%.
- Bitcoin dropped 0.5% to $67,898.