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Friday, May 24, 2024

Dollar Strengthens, Stocks Decline as Inflation Data Awaited

Global equity markets mostly faltered on Wednesday as investors await fresh inflation data to better assess the likelihood of Federal Reserve interest rate cuts, while the dollar edged higher on expectations of U.S. economic out-performance.

European stocks rose to a record high, boosted by company earnings, but stocks on Wall Street slid as a downbeat forecast from Uber (UBER.N), knocked its shares down 5.7% and made the ride-hailing firm one of the biggest decliners on the S&P 500.

The yen weakened for a third day and kept investors wary of intervention from Japanese authorities, while crude oil edged up from near two-month lows. In Europe, the Swedish crown was under pressure after the central bank cut rates as expected and said two more cuts were likely this year if inflation remained mild.

The big concern among traders and investors is whether inflation is on course to reach the U.S. central bank’s 2% target and when Fed Chair Jerome Powell might cut rates.

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Fed Boston President Susan Collins said the U.S. economy needs to cool off as an avenue toward getting inflation back to the central bank’s 2% target.

“The market is still very much waiting for the CPI report next Wednesday. We’re basically stuck in a bit of a range here until we get data,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.

“Investors are still very cautious at this point. They don’t want to over extrapolate from one data point or a couple of developments,” he said.

MSCI’s gauge of stocks across the globe (.MIWD00000PUS), fell 0.18%, while Europe’s pan-regional STOXX 600 index (.STOXX), rose 0.34% to a record close. On Wall Street, the Dow Jones Industrial Average (.DJI), rose 0.44%, the S&P 500 (.SPX), closed unchanged and the Nasdaq Composite (.IXIC), slid 0.18%.
Global stocks fell sharply in April as strong U.S. economic data caused investors to rein in their bets on rate cuts from the Fed and, by extension, other major central banks this year.

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