Equities mixed as investors eye earnings; yen on intervention watch

All three indexes were on a seesaw again today with all reaching substantial lows by noon, the Dow down about 200, only to recover again by 2 pm, then fall well into the red again, then recover to break-even again just minutes before close, then dive in the final moments to close down 42.  The Nasdaq and S&P went through almost identical patterns but both closed modestly in the black. This week’s PMI data has boosted Treasury yields which in turn has pressured equities. That makes Friday’s PCE data all the more critical. As today’s expert put it, “This week is getting back to fundamentals and earnings. Temporarily, we are sidestepping geopolitics.”  The consensus remains that caution is warranted due to inflation and employment. Volume came in at 10.45 billion, still below the 4-week average. 

Equities mixed as investors eye earnings; yen on intervention watch

By Chris Prentice and Ankur Banerjee

Wed April 24, 2024 5:28 PM

DJ: 38,503.69  +263.71        NAS: 15,696.64  +245.34        S&P: 5,070.55  +59.95     4/23

DJ: 38,460.92  -42.77           NAS: 15,712.75  +16.11          S&P: 5,071.63  +1.08       4/24

NEW YORK/LONDON, April 24 (Reuters) - U.S. and European shares finished mixed on Wednesday ahead of more corporate earnings this week, and the yen was mired near 34-year lows, keeping traders wary of intervention from Japan.  An auction of a record $70 billion worth of five-year U.S. Treasury notes on Wednesday helped to push bond yields higher, pressuring equities.  MSCI's gauge of stocks across the globe (.MIWD00000PUS), opens new tab rose 1.31 points, or 0.17%, to 759.46.  On Wall Street, the S&P 500 closed slightly higher after choppy trading.  Europe's broad STOXX 600 index (.STOXX), opens new tab closed down 0.5% as financial stocks dragged the index off a more than one-week peak.

The S&P 500 (.SPX), opens new tab gained 1.08 points, or 0.02%, to 5,071.63 and the Nasdaq Composite (.IXIC), opens new tab gained 16.11 points, or 0.10%, to 15,712.75. The Dow Jones Industrial Average (.DJI), opens new tab fell 42.77 points, or 0.11%, to 38,460.92.

"This week is getting back to market fundamentals and earnings. At least temporarily, we are sidestepping geopolitics which have been impacting markets in the last two weeks," said Samy Chaar, chief economist at Lombard Odier.  Spot gold continued its slide, trading down 0.26% to $2,315.82 an ounce. U.S. gold futures settled 0.2% lower at $2,338.4.

Purchasing Managers Index surveys on Tuesday showed overall business activity in the euro zone and in Britain expanded at their fastest pace in nearly a year, while business activity cooled in the U.S.  That divergence helped the euro nudge above $1.07 in Asia trade, its highest in more than a week.  "For once, US-eurozone divergence in data has come to the benefit of euro/dollar," said Francesco Pesole, currency strategist at ING, in a note.  "(Though) hard data - inflation and employment above all - has been the real drag on the pair so far, so caution is warranted when it comes to rallies prompted by activity surveys like PMIs."  U.S. gross domestic product and March personal consumption expenditure data due later this week will be crucial for the dollar and for investors' attempts to gauge the path of U.S. rates.

Traders expect the Federal Reserve to start easing rates in September and ending the year with 42 basis points of cuts, down from previous bets for 150 bps.  "One thing is for sure: the Fed is not raising rates. I believe they want to tighten financial conditions by communicating a further distance is required for cuts, but they can do those cuts at whatever speed is necessary," said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.  The benchmark 10-year Treasury note rose five basis points to 4.6459%.  In commodities, Brent crude futures fell 40 cents, or 0.45%, to settle at $88.02 a barrel, while U.S. West Texas Intermediate crude futures slipped 55 cents, or 0.66%, to $82.81. 

Per the CBOE, volume came in at 10.45 billion, still below the 4-week average.