Wall Street slips in lead up to inflation data; banks weigh

Oracle jumps after Q1 results beat estimates

By Reuters

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Traders work on the New York Stock Exchange floor . — AFP

Published: Tue 10 Sep 2024, 9:49 PM

Wall Street's main indexes fell on Tuesday ahead of key inflation data later this week that could provide clarity on the extent of the Federal Reserve's expected interest rate cut, while a fall in the shares of big banks weighed on the markets.

JPMorgan Chase was down nearly 7% after the bank's president tempered expectations about its income from interest payments, while Goldman Sachs fell 4.7% following CEO David Solomon's comments that the lender's trading revenue will probably slip 10% in the third quarter.

The S&P financial index lost 1.3%.

Also on Tuesday, the Fed's regulatory chief outlined a sweeping overhaul easing two major draft bank capital rules following intense industry opposition.

Apple fell 1% after China's Huawei launched a tri-fold smartphone hours after the debut of a new iPhone.

The iPhone maker also lost its fight against an order by EU competition regulators to pay 13 billion euros ($14.34 billion) in back taxes to Ireland.

Energy stocks were the biggest loser among the S&P 500 sectors, falling to their lowest since February as oil prices dipped on a weaker demand outlook.

Wall Street's main indexes had recorded gains of more than 1% on Monday as investors looked for bargains following a week of steep losses.

The focus this week continues to be on the August inflation reading on Wednesday that is likely to show a slight moderation in the headline number to 2.6% on a year-on-year basis, while it is expected to remain unchanged at 0.2% on month.

On Thursday, the producer prices report will follow the CPI data.

"A 25-basis point interest rate cut seems perfectly reasonable ... there might be a little bit of a risk of overreaction if the Fed were to go 50 bps," Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors, said.

Money markets are all but convinced that the Fed will begin its policy easing cycle later this month, with a 71% chance of a 25-bps cut and a total easing of 100 bps by the end of 2024, according to CME's FedWatch Tool.

All eyes will be on the highly anticipated televised debate between Kamala Harris and Donald Trump. The two, who have never met in person, will square off at 9 p.m. ET (0100 GMT) for a 90-minute debate hosted by ABC News.

At 12:23 p.m. ET, the Dow Jones Industrial Average fell 364.97 points, or 0.89%, to 40,464.62, the S&P 500 lost 20.52 points, or 0.38%, to 5,450.53, and the Nasdaq Composite lost 44.30 points, or 0.26%, to 16,840.30.

Oracle jumped 12.2% after beating estimates for quarterly results and forecast second-quarter revenue growth above expectations, boosted by growing demand for its cloud offerings.

Hewlett Packard Enterprise dropped 7.8% after the AI server maker announced a $1.35 billion mandatory convertible preferred stock offering to fund its acquisition of Juniper Networks.

Declining issues outnumbered advancers for a 1.87-to-1 ratio on the NYSE and a 2.01-to-1 ratio on the Nasdaq.

The S&P 500 posted 39 new 52-week highs and 12 new lows, while the Nasdaq Composite recorded 32 new highs and 130 new lows.