The Dow Jones Industrial dropped 0.01 percent at the close. and amounted to 38,459.08 points. The S&P 500 gained 0.74% at the end of the day. and amounted to 5,199.06 points. The Nasdaq Composite rose 1.68%. and closed the session at 16,442.20 points. The Russell 2000 index of small-cap companies is up 0.69%. and amounts to 2,042.32 points. The VIX volatility index falls by 5.63%, to 14.91 points. Technology stocks pulled the S&P 500 and Nasdaq Composite indexes higher on Thursday in the second part of the session. Nvidia gained over 4%, and Amazon gained almost 2%. to the highest level in history. Alphabet, the owner of Google, rose more than 2%. and it is also the most expensive in history. Apple gained over 4%, recording its best session since May 2023.
The weakening prospect of interest rate cuts poses a dilemma for market participants
On Friday, the focus of American investors' attention will be the beginning of the quarterly earnings season. Financial data will be presented, among others: JPMorgan Chase, Citigroup Inc and Wells Fargo. There was a solid sell-off on Wall Street on Wednesday following a higher-than-expected CPI reading for March. As a result, the market has revised its expectations regarding the path of interest rates in the US and is currently pricing in approximately two cuts by the end of the year, but only in the fall, not in June, as before the CPI reading.
At the beginning of the year, prices included 6 rate cuts in the US this year, by a total of 150 basis points. Fears of a rebound in inflation force investors to prepare for a scenario that few expected to face in 2024 – it may be a year without interest rate cuts in the US – say experts quoted by Reuters.
These concerns became even more important after Wednesday's solid consumer price data. Futures markets currently show that investors expect interest rates to fall by just 40 basis points this year, compared with the 150 basis points priced in in early 2024.
The fading prospect of interest rate cuts poses a dilemma for market participants who have been stockpiling stocks and bonds over the past few months in hopes of the Fed easing monetary policy. Barclays economists currently see the Fed cutting interest rates only once in 2024, by 25 basis points, following the release of stronger-than-expected consumer price index (CPI) data on Wednesday.
The Governing Council of the ECB left key interest rates unchanged. The ECB said that it may ease its stance if it is convinced that inflation is steadily falling below the target. The decision was in line with market expectations.
“The Governing Council is determined to return inflation to the 2% target.”
The interest rate on main refinancing operations and the lending and deposit rates at the central bank remain unchanged, at 4.50% and 4.75%, respectively. and 4.00 percent “The Governing Council remains committed to ensuring that inflation returns rapidly to its medium-term target of 2 percent. It believes that the ECB's key interest rates are at levels that make a significant contribution to the ongoing disinflation process. In future decisions, the Governing Council will ensure that The ECB's key interest rates remain sufficiently restrictive for as long as necessary.
The number of people applying for unemployment benefits for the first time last week in the US was 211,000. Economists expected the number of new unemployed to be 215,000. against 222 thousand previously, after correction from 221 thousand The number of unemployed people continuing to receive benefits amounted to 1.817 million in the week that ended on April 6. Analysts expected 1.8 million compared to the previously quoted 1.789 million, after correction from 1.791 million.
Prices of sold industrial production PPI in the USA increased by 0.2% in March. month-on-month, year-on-year increased by 2.1%. After excluding food and energy prices, the PPI index increased by 0.2%. mdm, and y/y increased by 2.4%. Analysts expected PPI to increase by 0.3%. mdm, and after excluding food and energy prices, they expected an increase of 0.2%. mdm vs. +0.6% respectively and +0.3 percent a month earlier.
On a y-o-y basis, PPI was expected to increase by 2.2%. and an increase of 2.3%. for the base indicator, compared to: +1.6 percent, respectively. and +2.0 percent in last month. “Inflation data is noisy, and the market is reflecting that reality. There are clear signs of disinflation in many places, but the hardest part will be the last mile of fighting inflation,” said Jamie Cox, managing partner at Harris Financial Group, referring to the Federal Reserve's ultimate goal. which is to achieve 2 percent. inflation.
Meanwhile, New York Fed President John Williams said there was no need to change policy anytime soon. His words follow the higher-than-expected March reading of the consumer price index published on Wednesday, which triggered a market sell-off. Minutes from last month's Fed meeting also showed that some officials remain concerned about the path of inflation toward the central bank's 2% target.
On the oil market, WTI contracts for May are down by 0.67%. to USD 85.63 per barrel, and May Brent futures fall by 0.28%. up to USD 90.23/b.
