US stocks lose steam as earnings surge flows in

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• Tue, February 6, 2024 at 5:27 PM GMT

  Loretta Mester: ‘Mistake’ to cut rates too soon

  Cleveland Fed president Loretta Mester is weighing in on the rate cut debate.

  In a speech at the the Ohio Bankers League economic summit in Columbus on Tuesday, Mester echoed Powell’s previous rhetoric of the risks associated with cutting interest rates too soon.

  “It would be a mistake to move rates down too soon or too quickly without sufficient evidence that inflation was on a sustainable and timely path back to 2%,” she said. “Doing so would undermine all the good work that has gone into getting inflation to this point.”

  “On the other hand, if year-ahead inflation expectations continue to decline, maintaining the current level of the nominal fed funds rate for too long would effectively be a tightening in our policy stance, which would pose an increasing risk to the maximum employment part of our mandate,” she warned.

  Although year-over-year inflation has remained significantly above the Federal Reserve’s 2% target, core inflation has come in below that 2% range on a six-month annualized basis.

  Still, Jerome Powell shut down the possibility of a March rate cut at the central bank’s meeting last month, saying that’s “probably not the most likely case or what we’d call the base case.”

  Largely, markets expect the central bank will begin cutting rates at its May meeting, pricing in a roughly 66% chance. However, investors have trimmed their bets at of late. Just one week ago, markets were pricing in an 85% chance of a rate cut by the end of the Fed’s May meeting.

  “Risk management will be the hallmark of monetary policy decisions going forward,” Mester said. “If the economy evolves as expected, I think we will gain that confidence later this year, and then we can begin moving rates down.”

• Tue, February 6, 2024 at 4:58 PM GMT

  Stocks wobble in midday trading

  US stocks lost steam by midday trading on Tuesday, as investors continued to debate the possibility of interest rate cuts ahead of a fresh batch of quarterly results.

  By midday trading, the S&P 500 (^GSPC) fell about 0.1%, while the tech-heavy Nasdaq Composite (^IXIC) dipped roughly 0.3%. The Dow Jones Industrial Average (^DJI), which initially opened flat, climbed about 0.1%.

• Tue, February 6, 2024 at 4:10 PM GMT

  Palantir’s AI push

  Palantir (PLTR) stock soared more than 25% Tuesday morning as investors cheered the defense software maker’s latest artificial intelligence advancements.

  “I’ve never before seen the level of customer enthusiasm and demand that we are currently seeing from [artificial intelligence platforms] in US commercial,” Palantir CFO Ryan Taylor told investors during the company’s earnings call on Monday night.

  The software company’s Artificial Intelligence Platform, or AIP, was mentioned nearly 50 times throughout the call. And according to Palantir, it’s a key reason it expects US commercial revenue to grow nearly 40% in 2024.

  It’s also the reason the stock surged more than 100% over the past year, as AI euphoria sent many tech stocks roaring. Amid calls that Denver-based Palantir’s stock was already overvalued, Tuesday’s market action is the latest sign that investors haven’t had enough of the AI trade — even if Wall Street believes parts of the trade have extended beyond any fundamental backing.

  “We are incredibly bullish on…