Stocks fell on Thursday as financial stocks snapped a three-day winning streak and Treasury yields fell.
The major U.S. indexes opened the day in the red and never got any meaningful momentum going, with the Dow losing 134 points, or 0.5% by day’s end, the S&P 500 dropping 0.4%, and the Nasdaq falling 0.4%.
On Friday, General Electric (GE), Honeywell (HON), VF Corp. (VFC), Kansas City Southern (KSU), and Schlumberger (SLB) among the notable S&P 500 members set to report earnings before the market open. The economic calendar will bring U.S. investors no notable data.
GE’s earnings will be most closely watched as it marks the company’s first report since being kicked out of the Dow in late June. Shares of the conglomerate are roughly unchanged since leaving the blue chip index.
Investors on Friday will also be looking for additional comments out of President Donald Trump’s interview with CNBC, set to air Friday morning, after his comments on the Fed made waves Thursday afternoon.
Overall, however, markets weren’t too rattled when a mid-afternoon headline from CNBC indicated Trump is not happy about the Federal Reserve’s decision to raise interest rates. “I’m not thrilled,” Trump said in an interview with the network set to run in full Friday morning.
“Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.”
The Fed’s independence from political influence is at the heart of how the central bank conducts monetary policy, and financial markets broadly trust that the Fed will retain this independence when forecasting the future evolution of interest rates.
Trump later said that his displeasure with the Fed raising rates reflects how he would feel as a private citizen. Of course, as a real estate developer who borrows most of the money for a given project, low rates are something Trump enjoyed in his professional career.
And in a statement following Trump’s comments provided to CNBC, the White House said, “[Trump] considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions… The President’s views on interest rates are well known and his comments today are a reiteration of those long held positions, and public comments.”
Last year, Trump said in an interview with the Wall Street Journal that he does favor a low interest rate policy, though ahead of the 2016 election suggested that the Fed was keeping rates low in an effort to help then-President Barack Obama.
But as Trump said to CNBC on Thursday, most people would probably advise a sitting president not to comment on monetary policy as the independence of the Federal Reserve is at the heart of the market’s faith in the world’s preeminent central bank.
Markets, however, still believe this independence is intact.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
- American economic hubris is peaking
- Harley-Davidson shows the unintended consequences of Trump’s tariffs
- The US housing market has an inventory problem
- Oil prices won’t hurt the economy until they hit $120 a barrel