Wall Street: Markets took a break from rising

Luc Williams

The Dow Jones Industrial dropped 0.41% at the close. and amounted to 39,313.64 points. The S&P 500 lost 0.31% at the end of the day. and amounted to 5,218.19 points. The Nasdaq Composite fell 0.27%. and closed the session at 16,384.47 points. The Russell 2000 index of small-cap companies gained 0.19%. and amounted to 2,0756.00 points. The VIX volatility index increased by 1.00 percent, to 13.19 points.

“Markets have the right to catch their breath”

During the shortened holiday week, financial markets will focus on macro data, including the PCE index and the GDP revision for Q4 in the US. “Markets have the right to catch their breath. There is obvious anxiety. Shares are extremely highly valued and catalysts for growth are becoming increasingly rare,” said Jeanne Asseraf-Bitton, director of research and strategy at BFT IM.

Meanwhile, HSBC was another investment bank that raised its year-end target forecast for the S&P 500 index to 5,400 points. with 5,000 points previously forecast. “The target increase is driven by improved earnings expectations, underpinned by stable GDP growth and positive business sentiment in the latest earnings season. Our assumptions are based on the forecast that the Fed will start cutting interest rates in June, assuming a total of 75 basis points of easing in 2024, in line with market consensus and Fed expectations resulting from the latest scatter chart,” HSBC strategists said in the report.

CME FedWatch indicates that the market is currently pricing in 75%. chances of a Fed rate cut in June. The market is on track for a fifth straight month of gains, with major U.S. stock indexes surpassing new all-time closing highs last week. The S&P 500 index rose about 2.3% last week, while the Dow gained just under 2%, its best week since December, approaching the 40,000 mark. The Nasdaq Composite rose about 2.9% during this period.

These gains were fueled by recent comments from the Federal Reserve keeping central bankers on schedule for interest rate cuts for this year, as well as continued investor enthusiasm for technology stocks amid an AI-fueled rally.

Overall investor sentiment remains above the historical average, according to the American Association of Individual Investors' latest weekly sentiment survey, reflecting continued market optimism. Still, some investors are concerned about the potential impact of an overly prolonged rally and higher interest rates for an extended period of time.

“It's a bit like dropping a ping-pong ball on the table, the first bounce is the biggest.”

Sam Stovall, chief investment strategist at CFRA Research, also noted that stocks have rallied, with the S&P now trading at a 33% premium to its average price-to-earnings ratio over the past 20 years. “We're coming off a post-FOMC high. The market is becoming more and more vulnerable to a decline or price decline,” Stovall told CNBC. Stovall expects investors to have a muted reaction to the PCE data, especially after they have already reacted to the latest readings of the Consumer Price Index and Producer Price Index. “It's kind of like dropping a ping-pong ball on the table, the first bounce is the biggest. When PCE finally comes out, it's like, okay, been there, done that. I think investors are less concerned about what he says. I don't see anything on the horizon nothing that could shake investors' current expectations,” he added.

Strong U.S. economic data and an AI-fueled rally have boosted stocks so far this year, and UBS says shares are likely to remain at current levels for the rest of the year. “Our baseline scenario assumes a soft landing in the US, in which economic growth weakens, inflation continues to retreat and interest rates decline,” the bank wrote. “We expect this to create favorable conditions for stock markets. However, we believe that a lot of good news is already priced in at the index level,” UBS experts added. On the other hand, UBS also warned of near-term market volatility that could materialize as investors adjust their expectations for Federal Reserve policy easing.

Boeing rose over 1%. The company's CEO, Dave Calhoun, announced that he will step down at the end of the year. The departure comes as airlines and regulators increasingly call for major changes at the company following a string of quality and manufacturing flaws in Boeing planes. Intel and Advanced Micro Devices fell about 1-2 percent each. following news that China has introduced guidelines to phase out US microprocessors from government personal computers and servers.

Shares of companies related to cryptocurrencies and blockchain, such as Coinbase Global, Riot Platforms and MicroStrategy, rose several percent each. due to the increase in bitcoin prices. United Airlines fell more than 3%. after the US Federal Aviation Administration said it was increasing its oversight of the company.

Sales of new homes in the US in February amounted to 662,000. on an annual basis, compared to the expected 675 thousand A month earlier, sales amounted to 664 thousand, after correction from 661 thousand. On a m/m basis, sales decreased by 0.3%. compared to an increase of 1.7%. mdm a month earlier, after a revision from +1.5%. Analysts expected +2.1%. On the oil market, WTI contracts for April are up by 1.74%. to USD 82.03 per barrel, and May Brent futures increase by 1.57%. up to USD 86.77/b.


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