(Bloomberg) — The world’s biggest stock market was hit by a pricing glitch in a session that saw equities fall and bonds rise after economic data signaled a slowdown in momentum.
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Traders reported issues with live pricing for the S&P 500 Index and Dow Jones Industrial Average for an hour and 20 minutes ending at noon time in New York. Pricing for individual stocks, exchange-traded funds and Nasdaq indexes continued to print normally throughout the disruption.
“At the time it was out, I wasn’t worried,” said Mike Zigmont, head of trading and research at Harvest Volatility Management. “Futures were still trading, so you could use them to get the SPX level. Most traders that know enough, didn’t care.”
Read: S&P 500, Dow Suffer Hourlong Pricing Glitch Before Resuming
Just 24 hours before the release of the Federal Reserve’s preferred price gauge, a report showed the US grew at softer pace — as both spending and inflation were marked down. Economic cooling means the US central bank could have room to cut interest rates this year. But that might also be a concern for consumption and, therefore, corporate profits.
“The economic data today are a double-edged sword,” said Chris Zaccarelli at Independent Advisor Alliance.
The S&P 500 dropped to around 5,250. Tech shares came under pressure as Salesforce Inc. tumbled the most in almost two decades after a weak outlook. Dell Technologies Inc. will report earnings after the close. Kohl’s Corp. plunged over 25% as the department-store chain slashed its guidance for the full year.
Treasury two-year yields, which are more sensitive to imminent Fed moves, dropped four basis points to 4.93%. The dollar retreated. Oil sank despite US data showing the biggest drop in the nation’s stockpiles in five weeks, with traders awaiting Sunday’s OPEC+ meeting for more guidance on supply.
Gross domestic product rose 1.3% annualized in the first three months of the year, below the previous estimate of 1.6%. The economy’s main growth engine — personal spending — advanced 2%, versus the previous estimate of 2.5%.
On the inflation front, the personal consumption expenditures price index — rose at a 3.3% annualized rate in the first quarter, slightly down from the initial projection.
“We have long been of the belief that it is the economy that is most important, and not lower interest rates for the sake of propping up stock prices,” said Zaccarelli. “Of course, they are interrelated because all things being equal, the economy is likely to stay out of recession if interest rates are lower than they are now, but ultimately it is the economic expansion – and continuation of corporate profits – that are the most important thing in the medium and long term.”
Zaccarelli’s base case this year is for inflation to remain relatively sticky and for the Fed to remain on the sidelines for most – if not all – of 2024, but also for the economy to continue to expand and for corporate profits to continue to grow.
“So the stock market should remain in a bull market, not withstanding the occasional pullback along the way,” he noted.
“It was a bond-friendly round of data,” said Ian Lyngen at BMO Capital Markets. “We’re looking for a drift lower in rates throughout the day as investors square positions ahead of Friday’s core-PCE update and month-end.”
The Fed’s first-line inflation gauge is about to show some modest relief from stubborn price pressures, corroborating central bankers’ prudence about the timing of interest-rate cuts.
Economists expect the personal consumption expenditures price index minus food and energy — due on Friday — to rise 0.2% in April. That would mark the smallest advance so far this year for the measure, which provides a better snapshot of underlying inflation.
“The name of the game is still inflation and interest rates, and despite an expected downward revision to GDP, there wasn’t much in today’s data to shake up the status quo,” said Chris Larkin at E*Trade from Morgan Stanley. “Stay tuned for tomorrow’s PCE Price Index release, because it could dominate market sentiment until next Friday’s jobs report.
Corporate Highlights:
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Dollar General Inc.’s sales rose more than expected last quarter, signaling progress in the discount retailer’s turnaround efforts.
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Best Buy Co. reported better-than-expected profitability in the first quarter, even as sales woes deepened and consumers remained on the sidelines with their electronics purchases.
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Foot Locker Inc.’s shares surged after the sneaker retailer’s turnaround plan got back on track.
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Birkenstock Holding Plc posted robust earnings and raised its forecast for the year as consumers snapped up its high-end sandals and clogs. The shares rose the most ever.
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WeWork Inc. won bankruptcy court approval to shed billions in debt, drop unprofitable leases from its office workspace portfolio and leave behind the legacy of its co-founder Adam Neumann.
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HP Inc. reported quarterly revenue that topped analysts’ estimates, including the first increase in PC sales in two years, an optimistic signal for a long-awaited rebound in the market.
Key events this week:
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Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
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China official manufacturing and non-manufacturing PMI, Friday
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Eurozone CPI, Friday
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US consumer income, spending, PCE deflator, Friday
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Fed’s Raphael Bostic speak, Friday
Stocks
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The S&P 500 fell 0.3% as of 12:30 p.m. New York time
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The Nasdaq 100 fell 0.6%
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The Dow Jones Industrial Average fell 0.9%
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The MSCI World Index was little changed
Currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro rose 0.4% to $1.0840
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The British pound rose 0.3% to $1.2741
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The Japanese yen rose 0.6% to 156.67 per dollar
Cryptocurrencies
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Bitcoin rose 1.5% to $68,433.01
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Ether rose 0.7% to $3,775.18
Bonds
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The yield on 10-year Treasuries declined seven basis points to 4.55%
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Germany’s 10-year yield declined four basis points to 2.65%
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Britain’s 10-year yield declined five basis points to 4.35%
Commodities
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West Texas Intermediate crude fell 1.6% to $77.99 a barrel
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Spot gold rose 0.3% to $2,344.59 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee, Denitsa Tsekova, Bre Bradham, Jessica Menton and Elena Popina.
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