Dow Jones Industrial Average Tops 40000 for the First Time By Vicky Ge Huang
The Dow Jones Industrial Average crossed 40000 for the first time, giving investors hope that stocks can keep climbing. Meanwhile, a surprise rate cut this summer could happen as signs of an economic slowdown are piling up. And lawmakers in both parties laid into the FDIC chairman over allegations of widespread sexual harassment at the agency.
Read on for this news and more.
Top News Dow Jones Industrial Average Tops 40000 for the First Time
The Dow Jones Industrial Average crossed 40000 for the first time , a milestone that appeared implausible little more than two years ago when the Federal Reserve began raising interest rates to cool an overheated economy.
Gloom and doom forecasts abounded. When the central bank ended the era of ultralow rates that prevailed in the years following the global financial crisis, economists predicted painful consequences: a U.S. recession and rising unemployment.
Trump vs. Biden: How the Dow's Performance Compares Grant's Take Retail Sales Don't Point to Rate Cut Just Yet
April's soft retail sales figure suggested the consumer might be slowing down. But perhaps that interpretation was premature .
U.S. retail sales were unchanged from March, the Commerce Department said this week. Economists surveyed by The Wall Street Journal had expected a 0.4% rise. That data, coupled with the lowest reading of so-called core inflation since 2021, sent bond yields lower and stocks higher.
U.S. Economy America Is Still Headed for a Soft Landing
Is Goldilocks back already? Certainly the bears are nowhere to be seen.
The cozy consensus that was prevalent late last year of a just-right pairing of slowing inflation and solid growth was upended by stubbornly high inflation readings for the first few months of 2024. So investors breathed a sigh of relief on Wednesday when April's consumer-price index came in a tad below expectations.
Financial Regulation Lawmakers From Both Parties Grill FDIC Chairman Over Scathing Report
Lawmakers in both parties laid into Federal Deposit Insurance Corp. Chairman Martin Gruenberg over a report that revealed widespread sexual harassment at the agency, with Republicans badgering him to resign and some Democrats signaling they didn't have confidence in him to lead the agency.
Forward Guidance Tuesday (all times ET)
7 p.m.: Atlanta Fed's Bostic, Boston Fed's Collins, Cleveland Fed's Mester speak at Atlanta Fed conference.
Wednesday (all times ET)
10 a.m.: National Association of Realtors releases U.S. existing-home sales for April.
2 p.m.: Fed releases minutes of April 30-May 1 FOMC meeting.
Research U.S. Housing Recovery Remains Weak
U.S. housing starts managed only a weak recovery last month, says Oliver Allen, U.S. economist at Pantheon Macroeconomics. Starts, a gauge of home-building, rose less than expected after plunging in March. "We were expecting much stronger starts in April," Allen says in a research note. Housing demand has helped builders to recover over the last year or so, but a combination of rising mortgage rates and worsening consumer confidence are set to take their toll, he says. - Joshua Kirby
Basis Points The European Central Bank should move cautiously after delivering a first rate cut in June, a member of its executive board said in an interview published Friday. With inflation cooling, the central bank has signaled that it is likely to lower its key interest rate from 4% next month. But Isabel Schnabel, one of six policy makers who works directly for the ECB, said a second move in the following month could be premature. - Paul Hannon Euro denominated high-yield corporate bonds are more attractive than their U.S. counterparts as they have favorable yield spreads and slightly lower risk than the U.S. high-yield bonds, Per Wehrmann, head of European high-yield at asset management firm DWS, says in a note. "Another argument in favor of European high-yield is the - on average - higher rating quality than on the U.S. market," he says. The European default rate is expected to rise to around 2.5% to 3.0% over the coming 12 months, from 1.5% currently, Wehrmann says. - Miriam Mukuru A slew of China data is in focus as market participants look to gauge the strength of the economic recovery. Economists at Goldman Sachs tip industrial production growth at 6.5% on year in April versus 4.5% in March, thanks to a low base, solid manufacturing PMIs and export growth. Fixed asset investment growth likely climbed further as well on solid manufacturing and infrastructure investment and favorable base effects, though Goldman expects the sharp property investment contraction to continue. It puts year-to-date FAI growth at 5.0% in April versus 4.5% in March. Retail sales will likely disappoint despite a low base last year. Goldman thinks growth likely stayed weak at 3.0% in April, with car sales slowing and inflation subdued. All the data are due Friday. - Fabiana Negrinochoa China's consumption and investment slowed unexpectedly in April , while industrial output beat expectations as Beijing doubled down on its manufacturing drive to spur growth amid a prolonged property slump and growing trade tensions with the West. China rolled out its boldest steps yet to fix its broken housing market, as Beijing sought to finally bring to an end a drawn-out real-estate crunch that has hobbled its economy for years. - Jason Douglas and Rebecca Feng Reserve Bank of Australia Gov. Michele Bullock will have realized this week that she is now on her own when it comes to getting inflation down . The grim understanding will have come to her after the federal government's budget released Tuesday contained little in the way of anything that will help her in the fight. - James Glynn About Us
WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com[].
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
05-17-24 0717ET
