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An employee scans a customer’s purchases at a Walmart Inc. store in Secaucus, New Jersey, U.S., on Wednesday, May 16, 2018.
Bullishness following the forward progress in corporate earnings was offset, however, as brewing investor uncertainty around rising interest rates and an badertive Federal Reserve checked the major indexes.
Hedge fund billionaire Ray Dalio of Bridgewater Associates told CNBC on Thursday that despite the gradual interest rate hikes, the Fed has already damaged badet prices.
“We’ve raised interest rates to a level that it’s hurting badet prices,” the founder of Bridgewater Associates said in an interview with CNBC’s “Squawk Box. ” “We’re in a situation right now that the Fed will have to look at badet prices before they look at economic activity. It’s a difficult position.”
Fed Chairman Jerome Powell touted the strength of the U.S. economy Wednesday evening, saying that markets should adjust to the idea that the central bank could hike interest rates at any time starting next year. Though Powell acknowledged that while the global economy is not as robust as it was last year, he added that domestic economic growth still looks strong.
The yield on the benchmark 10-year Treasury note fell to 3.081 percent Thursday. Bond yields rise as prices fall.
The U.S. central bank has hiked its overnight rate three times so far this year and is widely expected to do so again in December. Investors tend to see higher interest rates as a threat to profit growth and a hurdle for companies with large amounts of debt.
“I’m very happy about the state of the economy now,” he said in an interview with Dallas Fed President Robert Kaplan. “Our policy is part of the reason why our economy is in such a good place right now.”
Sentiment across the globe has improved on reports that China has delivered a written response to U.S. trade demands. U.S. government sources told Reuters Wednesday that China had sent a response to U.S. demands on the ongoing trade negotiation, giving hopes to investors that the two sides might bring an end to the spat.
Concerns over an oversupply in oil markets continues to dominate the market. On Thursday, oil prices stabilized as front-month Brent crude oil futures were trading at $66.78 per barrel, up 63 cents, or 0.95 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $56.72 a barrel.
Sterling plunged by over 1.4 percent against the dollar Thursday morning after U.K. Brexit Secretary Dominic Raab resigned from his post. This piles yet more pressure on U.K. Prime Minister Theresa May as she tries to get her draft Brexit agreement through Parliament.
Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 216,000 for the week ended Nov. 10, the Labor Department said on Thursday. Retail sales rose 0.8 percent, higher than the 0.5 percent expected.
— CNBC’s
Spriha Srivastava
contributed reporting.
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