By Joyce Yu
Philadelphia, PA–US stocks pulled back on Thursday with financial stocks under pressure.
As of 10:50am (ET), JPMorgan Chase and Citigroup fell 1.47% and 0.9% respectively. The two banks are set to announce their quarterly earnings today with JPMorgan expected to cement its position as the most profitable U.S. bank. Citi’s shares surged more than 50% in the past year, bolstering its market value to $200 billion.
U.S. markets refreshed record highs on Wednesday. The Dow Jones industrial average and the S&P 500 added 0.2%, while the Nasdaq drifted higher by 0.3%. In Asia, Japan’s Nikkei, fueled by cheaper Yen and lower corporate tax, closed at the highest level since 1996.
With the fourth round of NAFTA negotiations underway in Washington, Canadian Prime Minister Justin Trudeau tried Wednesday to convince Trump of the benefits of the free trade agreement during at a meeting in the White House. But his effort seemed to be unsuccessful as President Trump said that if Mexico, Canada and the U.S. can’t renegotiate the deal, “it’ll be terminated and that will be fine,” according to a CNN report.
President Trump, however, was open to bilateral trade pacts with either Canada or Mexico if a three-way deal cannot be reached.
U.S. producer prices rose in September as the price of gasoline recorded its biggest increase in more than two years as a result of hurricane-related production disruptions at oil refineries in Texas, according to the Labor Department’s latest report. The data is expected to boost wholesale inflation, providing ground for more rate hikes.。
The Labor Department said its producer price index for final demand increased 0.4 percent last month after rising 0.2 percent in August. Wholesale prices were also lifted by an increase in the cost of services. In the 12 months through September, the PPI jumped 2.6 percent, the biggest gain since February 2012.
Price pressures remain benign despite the labor market nearing full employment, with the jobless rate at more than a 16-year low of 4.2 percent. Fed Chair Janet Yellen has said that temporary factors such as one-off price cuts by wireless telephone companies contributed to lower inflation.
Separately, Fed officials debated hard last month over whether forces holding inflation down were persistent or temporary, minutes of the Fed’s Sept. 19-20 meeting published on Wednesday revealed. “Several” expressed concern that “the persistence of low rates of inflation might imply that the underlying trend was running below 2 percent,” according to a Reuters’ report. But the market is still expecting an interest-rate hike in December.
“We expect that only a further unanticipated decline in inflationary pressures would prevent the Fed from moving in December,” the Bloomberg quoted David Sloan, senior economist at Roubini Global Economics. “Looking further ahead, however, inflation is likely to need to show some improvement if three more rate hikes are to be delivered in 2018.”
