Federal Reserve Chairman Jerome Powell speaks during a meeting of the Economic Club of New York in New York City, U.S., October 19, 2023.
Brendan Mcdermid | Reuters
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What you need to know today
Powell says inflation is too high
Federal Reserve Chair Jerome Powell said the central bank would be “resolute” in its commitment to its 2% mandate, despite acknowledging recent signs of cooling inflation. Still, Powell didn’t commit to a specific policy path and gave no indication that he was leaning toward a push higher for interest rates.
Shaky markets
Stocks slid on Thursday, with the Dow down over 250 points after Powell’s speech and as the benchmark 10-year U.S. Treasury yield inched closer to the key level of 5%. Europe’s Stoxx 600 closed at seven-month lows, falling for a third straight session.
Disneyland or Disney World?
Disney highlighted in a filing just how strong its theme park business is for its bottom line. The theme parks segment had more than $24 billion in revenue for the nine months ended July 1. That’s 17% higher than the comparable year ago period. Admissions alone accounted for nearly $8 billion of 2023′s nine-month total, up 21% from last year.
Las Vegas Sands’ Asia bet
The world’s largest casino company’s recovery from the Covid-19 pandemic is gaining steam, and Asia is a big reason why. Las Vegas Sands announced it pulled in $1.12 billion in third-quarter adjusted property EBITDA, an important gauge of profitability in the gambling industry. That’s nearing pre-pandemic levels, off just 6% from the same period in 2019.
[PRO] How to take advantage of the near 5% yield
Investors were handed an income opportunity they haven’t seen in more than a decade when the 10-year Treasury yield climbed near 5% on Thursday. A move above 5% will lead more investors to scoop up the assets and can also make sense for those worried about the economy and a potential recession, predicted some analysts.
The bottom line
Stock markets have had a rough run this week as fears of inflation and high Treasury yields linger. There’s no two ways about where the Federal Reserve stands on its battle against rising prices as Chair Jerome Powell firmly backed the central bank’s 2% target, adding that he doesn’t think rates are too high now.
“Does it feel like policy is too tight right now? I would have to say no,” he said.
Recent data has shown that while U.S. inflation remains well above the target rate, the pace of monthly increases has decelerated, but evidently not fast enough by Fed standards.
And the worries don’t end there, the yield on the 10-year Treasury hit a high of 4.996%, trading at levels last seen in 2007, which begs the question – why put your money in risky stocks?
These high interest rates have also pressured some of the largest and most profitable banks in the United States as big Wall Street lenders have quietly been laying off workers all year — and some of the deepest cuts have yet to come.
“Banks are cutting costs where they can because things are really uncertain next year,” Chris Marinac, research director at Janney Montgomery Scott, said. “They need to find levers to keep earnings from falling further and to free up money for provisions as more loans go bad.”
Investors will now look for results from more financial companies including Comerica, Regions Financial and American Express. Oilfield services company SLB is also on deck to report.
And the good news is — it’s Friday!