Buzz on Business for Wednesday, January 17th, 2024

Most of the time, it seems to us, that speeches from members of the Federal Reserve generate a collective yawn. But most of the time is not all of the time, and when Wall Street decides to pay attention, markets often move dramatically. Christopher Waller, a member of the Fed’s Board of Governors and someone who is generally perceived to be a policy dove, threw cold water on the idea that rate cuts were coming, at least, anytime soon.

Stocks were up when he started speaking but closed lower and on big volume!

Stock Market Report

The indexes were mostly lower yesterday, and that’s after they attempted a rally into the closing bell.

• The Dow Jones Industrials fell 232 points and closed at 37,361, off six-tenths of a percent.
• The S+P 500 was off four-tenths and closed at 4,766, down eighteen points.
• The Nasdaq Composite was lifted by the semiconductors. It was still down, but not as much. It closed at 14,944, off twenty-eight points or two-tenths of a percent.
• The RSP, the S&P 500 Equal Weight Index Fund, was off six-tenths of a percent. But the SOXL, the Philadelphia Semiconductor Index with three-to-one leverage, managed a gain of 3.9% on the day.

Bond Markets

As you might expect, when a member of the Federal Reserve Board says rates might not come down anytime soon,  they up across the board on Tuesday.

• The 2-year treasury closed at 4.222%, which is up eight basis points.
• The yield on the 20-year was up ten ticks and closed at 4.409%

Oil and Gold

• Oil continued in the tight trading range it has been in lately. It closed at $71.80, off sixty-three cents.
• Gold was off $21.40 and will now set you back $2,030.20 a troy ounce.

Inflation Fears and Boeing Woes Ground Hopes

Two things seem to be weighing on the broader market. The first is inflation. The Consumer Price Index numbers came in above expectations on Thursday, and traders are slowly coming to the realization that inflation might not be as easy to beat as they had thought or hoped.

Combine this with an otherwise strong economy, especially the labor market—which, to be clear, is not setting any records but surely does not feel like it is in any danger of leading us into recession, and the dream of falling interest rates seems to be fading.

The second problem is Boeing. The stock has lost twenty percent in the last week in response to news that a door fell off one of its planes. In mid-air. And, to be sure, this is just the latest in a series of similar problems.

Five years ago, a share of Boeing stock would set you back nearly $450. Now, that same share trades hands at around $200. And this is not some high-flying tech startup with a shiny new app. It’s DJIA and S&P 500 component Boeing. When businesses with the size and market power of a Boeing lose over 55% of their value, it usually doesn’t end well.