- Stocks fell on Wednesday as traders focused on rising U.S. Treasury yields.
- The chances of a September rate cut have fallen to less than 50% from 60% last week, according to the CME FedWatch tool.
- Marathon Oil shares rose more than 11% on news of its $17 billion acquisition by ConocoPhillips.
Stocks fell on Wednesday, with the Nasdaq slipping from a record high, but investors focused on bond yields rising for a second straight day this week, with the 10-year Treasury note remaining above 4.5%.
U.S. Treasury yields are hovering at their highest levels in nearly four weeks after a weak bond auction on Tuesday and the latest inflation data dented hopes of a rate cut.
According to the CMEFedWatch tool, the market sees about a 43% chance of the Fed cutting interest rates at its September policy meeting, down from about 60% last week. Last week’s manufacturing and services data raised fresh inflation concerns, while more hawkish comments from Fed officials since then have strengthened views of longer-term higher interest rates.
Friday will see the release of the latest personal consumption expenditures report, the Fed’s preferred method of measuring inflation. The data is widely expected by the market to show a 2.7% increase, consistent with last month’s. The report will be key in forecasting how the Fed will act later this year.
“Most of the recent economic data suggests the economy is neither too hot nor too cold and is in good shape for the long term, so we don’t expect any big upside or downside surprises in the PCE index on Friday,” Carol Schleif, chief investment officer at BMO Family Office, said Wednesday. “That said, reaching the Fed’s 2% target is shaping up to be a tough landing.”
Marathon Oil shares rose 11% on news that the oil company will be acquired by rival ConocoPhillips for $17 billion, while American Airlines shares fell more than 9% after the company cut its quarterly outlook.
Below are U.S. stock indexes as of the start of trading at 9:30 a.m. on Wednesday.
What else is happening today:
Commodities, Bonds and Cryptocurrencies:
- West Texas Intermediate crude rose 0.4% to $80.19 a barrel, while the international benchmark Brent crude rose 0.4% to $85.56 a barrel.
- Gold fell to $2,360 an ounce.
- The yield on the 10-year Treasury note rose 3 basis points to 4.572%.
- Bitcoin fell 0.5% to $67,898.
