Stocks set for weekly fall, dollar climbs as Fed rate cut expected
By Chuck Mikolajczak
NEW YORK (Reuters) -A gauge of global stocks fell on Friday and was set for a weekly decline that would snap seven straight weekly gains, while the dollar rose and was on track for its strongest week since mid-January, as U.S. inflation data has led to new hopes for interest rate cuts.
Data on Friday showed U.S. import prices increased marginally in February as a surge in the cost of petroleum products was partially offset by modest gains elsewhere, suggesting an improving inflation picture.
Equities struggled this week after readings on U.S. consumer prices and producer prices indicated inflation remains sticky, dampening expectations the U.S. Federal Reserve will cut rates by its June meeting.
Markets are pricing in a 59.2% chance for a rate cut of at least 25 basis points (bps) by the Fed in June, down from 59.5% in the prior session and 73.3% a week ago, according to CME's FedWatch Tool.
The central bank is widely expected to hold rates steady at its policy meeting next week but investors will be watching the central bank's economic projections, including its interest rate forecast.
«We seem in a period here where everyone knows rates eventually will be lowered. The expectation of when it happens keeps getting slightly pushed back, but investors still believe it will happen,» said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
«It's been a back-and-forth market as people reposition and consider whether some of the real winners have just gone a little bit too far, so you're seeing them trade off.»
On Wall Street, the Dow Jones Industrial Average fell 190.89 points, or 0.49%, to 38,714.77, the S&P 500 lost 33.53 points, or 0.65%, to 5,116.95 and the Nasdaq
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