Stocks were mixed as doubts about interest rate cuts emerged

Stocks were in mixed territory on Friday, with the Dow Jones falling slightly even as the prospect of deep, early interest rate cuts continued to boost Wall Street sentiment.

The Dow Jones Industrial Average (^DJI) fell 0.2%, or about 70 points, after the blue-chip index closed at a new all-time high on Thursday. The S&P 500 (^GSPC) was almost unchanged, while the Nasdaq Composite (^IXIC) rose 0.2%.

Markets cheered after the Federal Reserve’s surprise shift in tone to dovish this week, as it signaled more interest rate cuts in 2024 and acknowledged its anti-inflation campaign was gaining momentum. This helped drive a record rise in US stocks, with major indexes recording six winning sessions in a row.

Read more: What a pause on federal interest rate hikes means for bank accounts, CDs, loans and credit cards

But the excited mood may start to fade, with some observers warning that markets may be getting ahead of themselves. New York Fed President John Williams told CNBC in an interview on Friday that talk of interest rate cuts is “premature.” In contrast to the Fed’s recent signals, European central banks have dampened hopes of policy easing.

Meanwhile, about $5 trillion in U.S. stock options are set to expire on Friday, 80% of them in contracts linked to the S&P 500. Some analysts believe the largest such expiration period in at least 20 years could prevent… No retreat.

Elsewhere, the price of oil rose, on track for its first weekly win since October, supported by a decline in the dollar fueled by the Federal Reserve. West Texas Intermediate crude futures (CL=F) were trading at around $72 per barrel, while Brent crude futures (BZ=F) were trading at around $77 per barrel, after rising more than 4% in the previous two sessions.

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Friday, December 15, 2023 at 4:25 PM GMT+1

Federal Reserve Governor John Williams says talk of cutting interest rates is “premature”

New York Federal Reserve President John Williams said Friday that the central bank is not discussing interest rate cuts even as the market continues with the optimistic narrative that the central bank’s tightening campaign is nearing an end.

“We’re not really talking about interest rate cuts right now,” he said during the conference. Interview on CNBC’s “Squawk Box.”He said officials are instead focusing on what Chairman Powell has said is the primary goal right now: setting monetary policy to get inflation down to 2%.

Following Powell’s comments on Wednesday, Wall Street jumped on the gas, interpreting the central bank’s latest forecasts as one that would call for deeper interest rate cuts than previously expected. This helped drive a record rise in US stocks, with major indexes recording six winning sessions in a row.

But the optimism is already fading, as Williams and other market watchers take advantage of breaks in the euphoric mood.

For now, Williams said talk of interest rate cuts is “premature.”
Friday, December 15, 2023 at 4:08 PM GMT+1

Rents in Manhattan fell for the first time in more than two years

Manhattan renters may increasingly find themselves in the driver’s seat when it comes to negotiating with landlords.

The median market rent fell to $4,000 in November, down 4.6% from October and 2.3% from a year ago, according to a report released this week from brokerage firm Douglas Elliman and real estate appraiser Miller Samuel. This was the first time in 27 months that the average monthly rent declined year-on-year.

New leases were up 9.7% year over year but were down nearly 29% from October. Meanwhile, the vacancy rate in November was 2.9%, up from 2.4% a year ago and 2.8% in October. The Manhattan market is of national interest because it is one of the largest rental markets in the country and provides a lens into demand from affluent renters. . The pandemic caused a mass exodus that upended normal rental patterns, but in 2022, New York expats returned in droves, sparking bidding wars and pushing prices to record levels.

Nationwide, rental market Cooled downThis is partly because there is much more inventory, which forces landlords to deal with high vacancies and gives them less leverage to raise rents. Seasonality may also be a factor, as demand is lower in the colder months.
Friday, December 15, 2023 at 3:37 PM GMT+1

Stocks open mixed but set for a winning week

Stocks opened on either side of the flat line on Friday as investors caught their breath after an initial wave of optimism on hopes of deeper, faster interest rate cuts next year.

The Dow Jones Industrial Average (^DJI) fell 0.2%, or about 75 points, after the blue-chip index closed at a new all-time high on Thursday. The S&P 500 (^GSPC) fell 0.2%, while the Nasdaq Composite (^IXIC) rose 0.2%.
Friday, December 15, 2023 at 12:47 PM GMT+1

Manufacturing highlights a sparse timeline

A first look at December manufacturing data highlights a relatively quiet economic and corporate calendar on Friday.

Economists expect S&P Global’s preliminary outlook on manufacturing and services sector activity published Friday morning to show activity continuing to contract in the manufacturing sector and expanding at a modest rate in the services sector this month.

On the corporate side, Darden Restaurants’ (DRI) results should serve as a long-term highlight.