(Bloomberg) — U.S. stocks held steady after data showed U.S. economic growth is slowing, with traders awaiting further signs that more easing is possible after the Federal Reserve cut interest rates by half a percentage point last week.
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The S&P 500 index rose 0.2%, trading in a narrow range after Fed officials’ comments Monday. Among individual stocks that rose, Intel Corp. shares gained 2.3% after Apollo Global Management Inc. proposed a multibillion-dollar investment in the chipmaker. Constellation Energy Corp. led energy companies higher after its deal with Microsoft Corp. was well-received by analysts.
U.S. business activity expanded at a slightly slower pace in early September, data showed Monday, as expectations deteriorated and the price receipts index hit a six-month high.
Minneapolis Fed President Neel Kashkari signaled he supports an additional half-percentage point interest rate cut by year-end in an essay that highlighted the weakening labor market and detailed his support for the central bank’s disproportionate tapering.
Atlanta Fed President Raphael Bostic said starting the central bank’s rate-cutting cycle with a big step would help bring interest rates closer to neutral levels, but that policymakers should not commit to a cadence of outsized measures. Later this week, investors await the Fed’s preferred benchmark rate and U.S. personal spending data, due Friday.
The U.S. dollar rose, while yields on two-year Treasury notes, which are sensitive to monetary policy, climbed.
“With the Fed’s first rate cut since 2020 now in the history books, many investors may be wondering, ‘Now what?’” said Chris Larkin of Morgan Stanley’s E*Trade. “That will keep the focus on economic growth, particularly the jobs market.”
In Europe, traders digested weaker-than-expected manufacturing data, boosting bets that the European Central Bank will cut rates more aggressively. The euro fell while European stocks rose. Weak PMI data from France and Germany on Monday were followed by data showing the euro zone’s private sector economy contracted for the first time since March.
The common currency weakened by 0.7% against the dollar.
“The market is almost calling for a more aggressive rate cut, especially after what we’ve seen from the Fed,” Marija Veitmane, senior multi-asset strategist at State Street, said on Bloomberg Television. The ECB “is clearly behind schedule,” she added.
French government bonds lagged after a new cabinet was named late Saturday, comprising a mix of conservatives and centrists. Investors fear that a government collapse could jeopardize the administration’s ability to push a budget through parliament in the coming weeks.
Company Highlights:
Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel Corp., according to people familiar with the matter, in a move that would be a vote of confidence in the chipmaker’s turnaround strategy.
Brookfield Asset Management has raised an initial $2.4 billion for a fund dedicated to investing in clean energy and transition assets in emerging markets, roughly halfway to its target.
Alex Karp, co-founder and chief executive of Palantir Technologies Inc., has a love-hate relationship with Wall Street. He has said analysts don’t understand the company and that he prefers Palantir’s loyal army of retail investors.
StandardAero Inc. is seeking to raise $1.1 billion in its initial public offering, after its backer Carlyle Group Inc. decided to pursue a listing for the aircraft maintenance services provider rather than a sale.
BNP Paribas SA has agreed to buy HSBC Holdings Plc’s private banking business in Germany as the French lender seeks a bigger share of the country’s growing wealth management market.
UniCredit SpA Chief Executive Andrea Orcel has decided to more than double the lender’s stake in Commerzbank AG, in a dramatic move that risks worsening tensions with the German government.
Elsewhere, Asian markets were supported by speculation that China is set to announce further stimulus measures, following a cut in its key short-term rate and a rare economic briefing scheduled for Tuesday.
“The start of the Fed’s easing cycle should lead to more stimulus from China, especially as the 5% growth target looks elusive,” Mohit Kumar, chief Europe strategist and economist at Jefferies International Ltd., wrote in a note. “The stimulus should also be beneficial for Europe.”
Gold hit a record high before slowing as escalating tensions in the Middle East fueled bets for further price gains for the precious metal given its safe-haven status. U.S. energy stocks climbed.
Main events of the week:
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Australia’s interest rate decision on Tuesday
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Jibun Bank Japan Manufacturing PMI and Services PMI on Tuesday
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Mexico CPI, Tuesday
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Bank of Canada Governor Tiff Macklem speaks Tuesday
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IPC Australia, Wednesday
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China’s medium-term lending facility interest rate, Wednesday
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Sweden’s interest rate decision on Wednesday
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Swiss interest rate decision on Thursday
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ECB President Christine Lagarde speaks on Thursday
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U.S. jobless claims, durable goods, revised GDP, Thursday
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Fed Chairman Jerome Powell delivers a pre-recorded speech at the 10th Annual U.S. Treasury Market Conference on Thursday
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Mexico interest rate decision on Thursday
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Japan Tokyo IPC, Friday
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Chinese industrial profits, Friday
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Eurozone consumer confidence, Friday
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U.S. PCE, University of Michigan Consumer Sentiment, Friday
Some of the main movements in the markets:
Actions
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The S&P 500 was up 0.2% as of 9:50 a.m. New York time.
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The Nasdaq 100 gained 0.4%
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The Dow Jones Industrial Average was little changed
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The Stoxx Europe 600 rose 0.4%
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The MSCI World Index rose 0.2%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.3% to $1.1127
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The pound was little changed at $1.3326.
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The Japanese yen was little changed at 143.98 per dollar.
Cryptocurrencies
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Bitcoin was little changed at $63,246.26
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Ether rose 2.9% to $2,648.44
Bonds
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The yield on 10-year Treasury notes rose three basis points to 3.77%.
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Germany’s 10-year yield fell three basis points to 2.18%
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The UK 10-year yield rose two basis points to 3.93%.
Raw materials
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West Texas Intermediate crude rose 0.5% to $71.36 a barrel
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Spot gold rose 0.4% to $2,631.92 an ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Margaryta Kirakosian, Alex Nicholson, John Viljoen, Catherine Bosley and Alice Gledhill.
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