A person walks past an electric screen displaying a graph showing the current Japanese Yen exchange rate against the U.S. dollar as the yen declined to 38-year lows past 161 per dollar, outside a brokerage in Tokyo, Japan June 28, 2024. REUTERS
(L-R) The Hong Kong Exchanges flag, Chinese national flag, and Hong Kong flag are hoisted outside the Hong Kong Stocks Exchange in Hong Kong on June 7, 2016. REUTERS
NEW YORK, Global stock indexes edged lower on Friday, reversing early gains, while Treasury yields rose and the U.S. dollar declined as investors absorbed data that showed U.S. monthly inflation was unchanged in May.
The flat reading in the U.S. personal consumption expenditures (PCE) price index last month followed an unrevised 0.3% gain in April, the data showed.
In the 12 months through May, the PCE price index increased 2.6% after advancing 2.7% in April. Last month’s inflation readings were in line with economists’ expectations.
The data fueled optimism for some investors that the Federal Reserve could begin cutting interest rates in September.
The MSCI world stock index, S&P 500, and Nasdaq all hit record highs in early trading but then retreated.
On Wall Street, volume surged toward the closing bell when the FTSE Russell finalized the reconstitution of its indexes. It was the second-biggest daily volume of the year.
“In the morning, the market seemed to be most focused on the PCE report,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.
But, “you had the Russell reconstitution, and the expectations were that we could see – especially toward the afternoon and close – quite a bit of movement and churn in the market,” she said. “You also had end-of-the-quarter repositioning and selling.”
The Dow Jones Industrial Average (.DJI), fell 45.20 points, or 0.12%, to 39,118.86, the S&P 500 (.SPX), lost 22.39 points, or 0.41%, to 5,460.48 and the Nasdaq Composite (.IXIC), lost 126.08 points, or 0.71%, to 17,732.60.
For the quarter, with the S&P 500 gained 3.9%, the Nasdaq rose 8.3% and the Dow fell 1.7%.
MSCI’s gauge of stocks across the globe (.MIWD00000PUS), fell 1.74 points, or 0.22%, to 802.01. The STOXX 600 (.STOXX), opens new tab index fell 0.23%.
Investors were still digesting comments made during the U.S. presidential debate late Thursday between Democratic President Joe Biden and Republican rival Donald Trump ahead of the November election. The debate left some of America’s allies bracing for a Trump return to office as president.
Trump Media & Technology Group (DJT.O), shares rose early in the day but ended down 10.8%.
U.S. Treasury yields were higher amid political uncertainty following the U.S. presidential debate and ahead of the French legislative elections.
Yields, which move inversely to prices, had declined after the U.S. inflation reading.
The yield on benchmark U.S. 10-year notes rose 10.4 basis points to 4.392%, from 4.288% late on Thursday.
The first round of voting in France is on Sunday, but the final outcome will not be known until after a second round of voting on July 7.
The U.S. dollar eased marginally after the inflation data.
The dollar initially fell against the yen, the currency pair most sensitive to U.S. economic data because of a high, positive correlation to Treasury yields.
The greenback, however, edged higher to trade near flat on the day, with investors still focused on the wide interest rate differential between the United States and Japan.
The dollar was last up slightly against the Japanese yen at 160.815 yen, after earlier hitting a 38-year high of 161.27 yen.
The yen’s slide has fueled expectations of intervention by the Japanese authorities to stem the currency’s weakness.
The dollar index , which measures the greenback against a basket of currencies, fell 0.05% at 105.84, with the euro up 0.1% at $1.0713.
Oil prices fell. U.S. West Texas Intermediate (WTI) crude futures fell 20 cents, or 0.24%, to settle at $81.54 a barrel.
Reporting by Caroline Valetkevitch in New York; Additional reporting by Huw Jones in London; Editing by Kim Coghill, Jacqueline Wong, David Goodman, Christina Fincher and Daniel Wallis
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