Markets stumble ahead of inflation reports

Dow fell 155, decliners over advancers 5-4 & NAZ went up 68.  The MLP index was little changed at 280 & the REIT index rose 4+ to the 435s.  Junk bond funds crawled higher & Treasuries saw buying which lowered yields (more below).  Oil dropped 2+ to the 66s & gold added 6 to 2538.

Dow Jones Industrials

A report released by the Federal Reserve Bank of New York found that US consumers see inflation easing, but that worries about the labor market & managing household debt loads rose.  The New York Fed's latest Survey of Consumer Expectations found that respondents continue to see inflation at 3% a year from now & 2.8% in 5 years, findings that are unchanged from the prior month.  It found that consumers' price expectations over the next year involved larger increases for gas, rent & medical care, as well as smaller increases for food & college expenses.  The survey also found that for the 3rd straight month, respondents' expectations of missing a debt payment in the next 3 months increased with a 0.3 percentage point rise in Aug to 13.6%, the highest level since the early stages of the COVID pandemic in Apr 2020.  Consumers' views of the labor market were mixed in the report, with fewer worries about losing a job but also less optimism about voluntarily leaving a current job or finding a new job after losing their present role.  The perceived probability of an individual losing their job in the next 12 months fell by 1 percentage point to 13.3%, below the 12-month trailing average of 13.7%, while the probability of leaving a job voluntarily also fell to 19.1% from 20.7%.  The report also found that the perceived probability of finding a job if an individual lost their job decreased, with a decline of 0.2 percentage points to 52.3%, below the 12-month average of 53.9%.  Expectations for growth in household incomes increased by 0.1 percentage points to 3.1%, while spending growth expectations increased by the same amount to 5.0%.

Consumers see inflation easing, anxious about job market, personal debt: NY Fed survey

Europe's top courtupheld a €2.4B ($2.65B) fine imposed on Google (GOOGL) for abusing its dominant position by favoring its own shopping comparison service.  The fine stems from an antitrust investigation by the European Commission, the exec arm of the EU, which concluded in 2017.  The commission said at the time that GOOGL had favored its own shopping comparison service over those of its rivals.  GOOGL appealed the decision with the General Court, the EU's 2nd-highest court, which also upheld the fine.  GOOGL then brought the case before the European Court of Justice (ECJ), the EU's top court.  The ECJ on dismissed the appeal & upheld the commission's fine.  “We are disappointed with the decision of the Court,” a GOOGL spokesperson said.  “This judgment relates to a very specific set of facts. We made changes back in 2017 to comply with the European Commission’s decision. Our approach has worked successfully for more than seven years, generating billions of clicks for more than 800 comparison shopping services.”  To address European concerns, GOOGL in 2017 made changes that meant it will have to bid in the same way as competitors for advertising slots within shopping search results.  The decision caps off another major case for the EU after the ECJ also confirmed a European Commission decision from 2016 that Apple (AAPL), a Dow stock, should pay €13B in back taxes in Ireland.  Regulators are mounting pressure on Alphabet owned GOOGL globally.  In Mar, the EU launched an investigation into Alphabet under its sweeping Digital Markets Act, which scrutinizes the practices of tech companies in Europe.  In the US GOOGL is in the midst of an antitrust case brought by the Dept of Justice with regard to its advertising business after losing another antitrust case earlier this year.  GOOGL stock rose 1.93 & AAPL stock fell 13¢.

Google's 2.4 billion euro fine upheld by Europe's top court

Treasury yields dipped ahead of the final major inflation report before the Federal Reserve's Sep meeting.  The yield on the 10-year Treasury was nearly 3 basis points lower at 3.674%, with the 2-year Treasury yield also down by more than 2 basis points at 3.642%.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  Treasury yields have stabilized after tumbling last week when a series of labor market releases missed estimates.  The data also sent US stocks to their worst week of the year.  Investors are now keenly awaiting Aug's consumer price index, set to be published tomorrow to see if headline inflation will ease further from Jul's 2.9% reading as expected.  That will be followed by the producer price index on Thurs.  Debate has erupted over whether the Fed could opt for a 50 basis point rather than a 25 basis point interest rate cut during the Sep 17-18 meeting.  Some analysts argue such a move would show the Fed's commitment to supporting jobs growth, as others contend it would be an unnecessary step that could sow market panic. CME Group's FedWatch Tool currently places market pricing for a 50 basis point move at 27%, against 73% for the smaller move.

Treasury yields edge higher ahead of final inflation prints before Fed meeting

Stocks wavered as investors geared up for a looming consumer inflation report seen as crucial to determining the size of the first US interest-rate cut in years.  The moves follows yesterday's sharp rebound, which saw the major gauges surge over 1% as investors went post-rout bargain hunting.  Volatility is expected in the markets as investors waver between hopes for a hefty 0.5% rate cut from the Federal Reserve & worries about recession risks.