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U.S. stocks post modest weekly gain ahead of Fed meeting

2019-06-17 01:49

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NEW YORK, June 16 (Xinhua) -- U.S. equities ended the week slightly higher, adding to June rally, as Wall Street is awaiting the central bank's monetary policy meeting.

In the week ending June 14, the Dow rose 0.41 percent, the S&P 500 climbed 0.47 percent and the Nasdaq gained 0.7 percent.

Several stocks became spotlight during the week.

Broadcom shares tumbled in the week when the U.S. chipmaker reported weaker-than-anticipated quarterly revenue and cut its guidance for 2019, citing broad-based demand weakness.

Raytheon and United Technologies agreed to an all-stock merger that would create a combined company with approximately 74 billion U.S. dollars in annual sales. Shares of both companies, however, posted weekly drop.

Walt Disney was among the biggest winners on Wall Street this week. The stock soared more than 4 percent on Thursday after an analyst at Morgan Stanley raised his price target on the stock to 160 dollars per share from 135 dollars. The analyst attributed his optimism to the company's new streaming service. Disney shares registered a 2.6-percent weekly gain.

The Federal Reserve (Fed) is set to hold a two-day meeting on monetary policy next week. Wall Street will look for clues about potential rate cuts later this year.

At its last policy meeting in early May, the Fed said it was going to be patient for some time before more interest rates moves.

Yet, escalating trade tensions and signs that the economy is on a slowing trajectory have fueled market speculations on possible rate cuts in the near future.

The U.S. consumer price index (CPI) for all urban consumers increased 0.1 percent in May on a seasonally adjusted basis after rising 0.3 percent in April, the Department of Labor reported Wednesday.

The closely-watched core inflation that strips out food and energy also advanced a scant 0.1 percent last month.

The tame CPI offers one more reason to cut rates, said Chris Low, chief economist at FTN Financial.

Meanwhile, he added that it's likely the rate-setting Federal Open Market Committee (FOMC) "will conclude that cutting rates to boost inflation is not a good idea" in the coming meeting.

"We expect a further slowdown in economic growth to eventually prompt the Fed to cut interest rates, particularly with underlying inflation muted. But it is hard to see that happening before the September FOMC meeting, even though markets have begun to price in a cut by July," economists at Capital Economics said in a Wednesday note.

Market expectations for a rate cut in July were at 86.3 percent, according to the CME Group's FedWatch tool. Investors are also pricing in a 70.1 percent chance of another cut in September.

More ho-hum economic data released this week also enhanced market's pricing in rate cuts.

U.S. retail sales rose 0.5 percent in May, the Commerce Department reported. That was below the 0.6 percent gain expected by economists polled by Refinitiv.

April retail sales were revised higher. May sales were also up 0.5 percent when excluding auto, gas building materials and food, showed the report.

The University of Michigan reported its consumer-sentiment index fell to 97.9 in June from 100 in May. The reading missed market consensus.

The U.S. initial jobless claims, a rough way to measure layoffs, registered 222,000 in the week ending June 8, an increase of 3,000 from the previous week's revised level, the Department of Labor said. Economists polled by MarketWatch estimated that new claims would total a seasonally adjusted 218,000.

A Morgan Stanley gauge of U.S. business conditions deteriorated on all fronts in June, falling well into recessionary territory, according to analysts at the firm.

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