(Bloomberg) — Wall Street traders sent stocks down and bonds up after the latest round of economic data signaled a slowdown in momentum.
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Just 24 hours before the release of the Federal Reserve’s preferred price gauge, data showed the US grew at softer pace — as both spending and inflation were marked down. Economic cooling means officials could have room to cut rates this year. But that might also be a concern for consumption and, therefore, corporate profits.
“The economic data today are a double-edged sword,” said Chris Zaccarelli at Independent Advisor Alliance.
Read: Traders Say Disruptions Minimal During S&P 500 Pricing Glitch
Traders had issues with live pricing for the S&P 500 Index and Dow Jones Industrial Average for more than one hour on Thursday morning in New York. Individual stocks and exchange-traded funds continued to print normally throughout. That, along with trading of futures contracts, helped traders navigate the disruption.
“At the time it was out, I wasn’t worried,” said Mike Zigmont at Harvest Volatility Management. “Futures were still trading, so you could use them to get the SPX level. Most traders that know enough, didn’t care.”
The S&P 500 dropped to around 5,250, led by losses in tech. Salesforce Inc. tumbled after a weak outlook. Dell Technologies Inc. will report earnings after the close. Treasury two-year yields dropped five basis points to 4.92%. The dollar retreated.
Read: The Fed Thinks It’s Fighting Inflation. Think Again: Bill Dudley
Fed Bank of New York President John Williams said he expects inflation to continue falling in the second half of this year, adding that elevated borrowing costs are restraining the economy.
Zaccarelli says he’s long been of the belief that the economy matters more than lower interest rates for the sake of propping up stock prices.
“Of course, they are interrelated because all things being equal, the economy is likely to stay out of recession if interest rates are lower than they are now, but ultimately it is the economic expansion – and continuation of…
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