Tuesday data: consumer funk gives Fed cut some cred
U.S. indexes mixed: Nasdaq, S&P edge lower, Dow modestly higher
Materials lead S&P 500 sector gainers; Financials weakest group
Euro STOXX 600 index up ~0.4%
Dollar down; Bitcoin dips; gold up, crude rises ~2%
U.S. 10-Year Treasury yield edges up to ~3.75%
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
TUESDAY'S DATA: CONSUMER FUNK GIVES FED CUT SOME CRED
From Tuesday's data, market participants learned that the American consumer, who carries about 70% of U.S. GDP on their shoulder, has grown grumpier since Labor Day.
And home prices keep growing, albeit at a slower pace.
The mindset of the American consumer has unexpectedly soured this month.
The Conference Board's (CB) Consumer Confidence index USCONC=ECI slid 6.9 points to 98.7, well shy of the 104.0 consensus.
"September's decline was the largest since August 2021 and all five components of the Index deteriorated," writes Dana Peterson, CB's chief economist.
Survey respondents' assessment of their current situation deteriorated by 7.7%, while near-term expectations dropped by 5.3%.
As a result the gap between the present and future outlooks narrowed, which is generally a good sign. It's when the gap widens that recession can be imminent.
"It's never good to see consumer confidence fall this much," says Jamie Cox, managing partner at Harris Financial Group. "Consumers are clearly concerned about the implications of the upcoming election, the increasing conflict around the world, and the stubbornly high cost of food and credit."
"The Federal Reserve seldom reads the tea leaves correctly on when and how much to cut rates, but 50 seems more correct in light of these data," Cox adds.
Attitudes with respect to the labor market turned more pessimistic.
"Views of the current labor market situation softened further," Peterson adds. "Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future income."
The percentage of participants who said jobs are "plentiful" dipped to 30.9% from 32.7%, while those who said jobs are "hard to find" rose to 18.3% from 15.8%.
The difference between those two metrics ("jobs plentiful" minus "jobs hard o find") is now at its most dour level since March 2021.
Separately, home price growth in the United States continued to cool in July, according to CaseShiller.
The report's 20-city composite USSHPQ=ECI showed monthly and annual growth rates of 0.3% and 5.9%, respectively, marking a significant deceleration from June and landing just about where analysts expected.
A decelerating climb, however, is still a climb, and U.S. home prices, on aggregate, hit yet another record high in July.
Tight monetary policy has sent mortgages to the stratosphere, which has the double-whammy effect of pricing many potential buyers out of the market and dissuading potential sellers, who locked in lower rates, from putting their homes up for sale, resulting in a supply dearth.
"Sustained easing in interest rates eventually should be supportive of housing activity over time, and lead to a resumption of stronger house price increases," says Carl Weinberg, chief economist at High Frequency Economics. "That will not happen fast. The prospect of much lower mortgage rates and construction finance rates in the year and more ahead will cause many purchases and projects to be deferred to a later date."
"Prices of homes are not falling, but they are slowing," Weinberg adds.
Among the cities in the 20-city composite, New York and Las Vegas were up most year-on-year, rising 8.76% and 8.24%, respectively.
(Stephen Culp)
*****
FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:
U.S. INDEXES OPEN SLIGHTLY HIGHER, LOSE SOME GROUND AFTER DATA - CLICK HERE
BENCHMARK TREASURY YIELD PERKS UP, AWAITS PCE - CLICK HERE
ANOTHER CUT TO LUXURY EARNING - CLICK HERE
MORE LOVE FOR US SMALL CAPS - CLICK HERE
CHINA POP FOR MINERS, LUXURY AND AUTOS - CLICK HERE
DAX FUTURES HIT RECORD HIGH - CLICK HERE
NO BAZOOKA, BUT CHINA'S LATEST STIMULUS IS A RELIEF - CLICK HERE
Consumer confidence https://reut.rs/3MWd07H
Consumer confidence jobs https://reut.rs/3TGAtO3
CaseShiller https://reut.rs/3XDRgT3
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
