US Stocks Decline as Fed Keeps Rates Steady

Daniel Fowler
May 3, 2018

In the oil market, US crude CLcv1 fell 0.21 percent to $67.11 per barrel and Brent LCOcv1 was last at $72.55, down 0.79 percent on the day. Weak results from drugmaker Gilead Sciences and animal health company Zoetis weighed on health care companies. The Commerce Department reported Monday that the core personal consumption expenditures price index, which excludes food and energy, rose 1.9% from a year ago in March.

Stock markets are also nervous about the recent rise in US bond yields, with 10-year yields at 2.99 per cent, just below recent four-year highs above 3 per cent.

"The market continues to be in a tug-of-war between the potential for higher interest rates, inflation counterbalanced by the potential for higher earnings and revenue growth", said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in NY.

"It's hard to see investors willing to take increasing risk ahead of a couple more weeks of trade discussions and negotiations to come", said Matthew Miskin, market strategist at John Hancock Investments in Boston. One of the key debates on Wall Street is whether the Fed will raise rates three times as planned, or if it will raise them four times in response to more signs of inflation and faster economic growth.

Forecast-beating results from the world's biggest company, Apple Inc AAPL.O , lifted tech shares, limiting losses in stocks. The company's results fell short of analyst projections and it also said sales to wholesalers declined.

The pan-European FTSEurofirst 300 index .FTEU3 rose 0.60 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.06 percent. Coca-Cola and Pepsi continued to fall, with Coke down 1.2 percent to $42.06 and Pepsi sliding 1.9 percent to $97.23.

In company news, Snap Inc shares plunged 21.9% after the Snapchat owner fell short of Wall Street forecasts for revenue and regular users. Xerox said the new board will reconsider the deal with Fujifilm and could terminate or restructure Xerox's relationship with the company.

USA court orders Iran to pay 9/11 survivors billions in damages
On top of that, a 4.96 percent annual interest rate will also be added to the amount, starting from the day of the terror attack . It should be noted that a default judgement is issued when a defendant does not contest the case in court, which Iran did not.

Apple's shares rose 4.1 percent in premarket trading after it posted resilient iPhone sales in the face of waning global demand and promised $100 billion in additional stock buybacks. With consumer inflation surging to 11-year highs in the first quarter, wage growth could surprise to the upside in April.

German yields, dragged to six-week highs by the USA bond selloff, stood just below those levels.

The DAX in Germany soared 1.51 percent and the French CAC 40 picked up 0.16 percent.

Benchmark U.S. crude jumped 1 percent to $67.93 a barrel in NY, while Brent crude, the worldwide standard, rose 0.3 percent to $73.36 per barrel in London.

Wholesale gasoline lost 0.4 percent to $2.08 a gallon. The Fed also signaled it was willing to let inflation rise above 2%, stating that it's a "symmetric" target.

Gold fell 0.1 percent to $1,305.70 an ounce. The contract jumped 1 percent to settle at $67.93 a barrel on Wednesday.

ASIA: Japan's Nikkei 225 slipped 0.2 percent and the Hang Seng in Hong Kong lost 0.3 percent.

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