Wall Street ends lower ahead of US data; dollar pressured by yen, yuan

It was a day in the red for all three indexes, especially the Dow which lost 162, and being blithely dismissed by the market as (a) profit-taking after the best week of the year last week, (b) taking a breather ahead of CPE inflation data coming Friday, and (c) light volume consolidation with many on spring break and a holiday right around the corner. Year-on-year headline and core PCE is expected at 2.5 and 2.8% respectively. PCE from January to February is expected slightly hotter, but Core PCE slightly cooler. For a holiday week volume came in light as expected at 9.8 billion. 

Wall Street ends lower ahead of US data; dollar pressured by yen, yuan

By Stephen Culp

Mon March 25, 2024 4:23 PM

DJ: 39,475.90  -305.47        NAS: 16,428.82  +26.98         S&P: 5,234.18  -7.35        3/22

DJ: 39,313.64  -162.26        NAS: 16,384.47  -44.35          S&P: 5,218.19  -15.99      3/25

NEW YORK, March 25 (Reuters) - U.S. stocks lost ground at the start of a holiday-shortened week on Monday as investors positioned themselves ahead of inflation data.  All three major U.S. stock indexes ended the session in the red, with the blue-chip Dow suffering the largest percentage loss.  The dollar dipped as the risk of yen intervention loomed and it came under pressure from China's government-supported yuan rally.  Wall Street focused on Boeing (BA.N), opens new tab after the planemaker said its CEO Dave Calhoun will step down by year-end after a flurry of safety concerns.

"On the heels of the best week of the year last week, stocks are taking a bit of a breather today, with the inflation data set to come out later this week," said Ryan Detrick, chief market strategist at Carson Group in Omaha.  "The truth is many people are on spring break this week," Detrick added. "We have a holiday right around the corner, so a light-volume consolidation after the big run we've seen is perfectly normal."

After the U.S. Federal Reserve's decision last Wednesday to leave its key policy rate unchanged, and its "dot plot" still reflecting expectations for three cuts to that rate this year, markets are looking ahead to Friday's Personal Consumption Expenditures (PCE) report due from the Commerce Department.  The report will be released on the Good Friday holiday despite it being a market holiday.  Analysts expect the PCE data to show inflation gathered heat in February, with prices rising by 0.4% after January's 0.3% gain. However, "core" price inflation, which strips away volatile food and energy prices, is seen cooling to 0.3% from 0.4%.  Higher PCE could cause 'some concern' -market expertNEXTjust a little bit more value consciousness, not enough to be as strongly concerned, but its something we will wanted to monitor.  Year-on-year, headline and core PCE price indexes are expected to land at 2.5% and 2.8%, respectively, hovering within one percentage point of the Fed's average annual 2% target.

The Dow Jones Industrial Average (.DJI), opens new tab fell 162.26 points, or 0.41%, to 39,313.64, the S&P 500 (.SPX), opens new tab lost 15.99 points, or 0.31%, to 5,218.19 and the Nasdaq Composite (.IXIC), opens new tab dropped 44.35 points, or 0.27%, to 16,384.47.

European stocks reversed a modest sell-off to eke out nominal gains as market participants digested dovish sentiment from major central banks.  The pan-European STOXX 600 index (.STOXX), opens new tab rose 0.04% and MSCI's gauge of stocks across the globe (.MIWD00000PUS), opens new tab shed 0.24%.  Emerging market stocks lost 0.25%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab closed 0.07% lower, while Japan's Nikkei (.N225), opens new tab lost 1.16%.

The dollar dipped against a basket of world currencies and the yen was little changed after Japan's top currency diplomat warned against speculators trying to weaken the currency, while China’s yuan gained on suspected selling of dollars by state-owned banks.  "China and Japan trying to shore up their currencies is a reflection of weakness in their economies, and they’re putting a band-aid on something that requires something more significant," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York.  The dollar index (.DXY), opens new tab rose 0.2%, with the euro up 0.3% to $1.0837. 

Per CBOE, volume came in light as expected for a holiday week at 9.8 billion.