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Investing.com – The Dow closed lower Monday, pressured by McDonald’s-led consumer stock volatility and a jump in Treasury yields after Chairman Jerome Powell blocked hopes of an upcoming rate cut of interest.
As of 4pm ET (9pm GMT), stocks were down 274 points or 0.7%, tech-heavy stocks were down 0.2%.
Treasury yields rise after Powell signaled patience on cuts
In a Sunday interview with CBS’ “60 Minutes” that aired Sunday. Powell told the news that the resilience of the US economy may give Fed officials more time to take a “prudent” approach to possible cuts in benchmark interest rates.
Powell added that he would “like to see the data confirm” that inflation – the main target of an aggressive series of Fed policy tightening that has pushed borrowing costs to more than two-decade highs – is cooling towards central system. the bank declared 2% in a “sustainable manner”.
The cautious view on rate cuts pushed Treasury yields higher as bets on rate cuts were curbed, with traders now pricing in just a 16% cut in March, well below the peak of the 80% seen earlier this year, and now they see only five cuts for this year compared to the previous six.
The rate-sensitive yield and the benchmark 10-year yield, which typically move inversely to prices, were higher following Powell’s comments.
McDonald’s collapse after fourth-quarter sales fails to put pressure on consumer stocks
McDonald’s (NYSE:) fell more than 3% and reported fourth-quarter comparable sales growth of 3.4%, missing Bloomberg’s consensus estimate of 4.79%, as the burger chain’s international operations have been affected by boycotts linked to violence in the Middle East.
The impact of the boycotts is expected to continue as long as the war rages, the company warned, following a “significant” impact in the fourth quarter.
In addition to the collapse of McDonald’s, the ongoing sell-off of Tesla (NASDAQ:) and weakness in cruise stocks, including Carnival Corporation (NYSE:), have added further pressure on consumer stocks, which have been one of the sectors with the worst performances of the day.
Nvidia (NASDAQ:) hits a new record after support from Goldman Sachs; caterpillar shines; Boeing slips on potential delays
Nvidia closed at a new all-time high after Goldman Sachs raised its price target on the chipmaker to $800 from $625, suggesting a 16% upside from current levels, amid optimism that the rise of generative AI spending will continue to support demand for Nvidia’s AI. intelligence
Goldman Sachs, citing new industry data, said it no longer expects a slowdown in data center spending amid “robust” demand for Gen-AI.
Caterpillar (NYSE:), the machinery maker often considered a bellwether of America’s industrial sector, rose nearly 2% after reporting fourth-quarter adjusted earnings per share that beat expectations, as higher prices helped to compensate for a decline in sales. volume. Caterpillar shares rose sharply in early U.S. trading.
Boeing (NYSE:) fell more than 1% after the struggling planemaker warned that a new problem in some fuselages of its 737 jets could lead to “near-term” delivery delays.
Scrutiny over the safety of Boeing jets has increased after a dangerous mid-air door failure on one of its 737 Max 9 planes operated by Alaska Airlines last month. In the wake of the crash, Boeing offered no forecast for its 2024 financial year, saying it still has “a lot to prove” to regain the trust of regulators and passengers.
The parade of corporate profits continues
Media companies will also be in focus in the coming days, with results expected from industry leaders like Walt Disney (NYSE:), Fox and Warner Music Group.
Chinese e-commerce operator Ali Baba (NYSE:), ride-sharing company Uber (NYSE:) and chip designer Arm Holdings (NASDAQ:) are expected to release their reports this week.
(Scott Kanowsky and Oliver Gray contributed to this report.)