Wall Street: Stock markets down slightly. Interest rates in the US may remain high

Luc Williams

The Dow Jones Industrial was up 0.17% at the close. and amounted to 37,798.97 points. Although the Dow ended its losing streak, the recent declines wiped out much of its year-to-date gains. Just a few weeks earlier, the index approached 40,000 points. The S&P 500 lost 0.21% at the end of the day. and amounted to 5,051.41 points. The Nasdaq Composite fell 0.12%. and closed the session at 15,865.25 points. The Russell 2000 index of small-cap companies is down 0.39%. and amounts to 1,967.99 points. The VIX volatility index falls by 4.32%, to 18.40 points. Yields on US 10-year Treasury bonds rise to 4.659%.

“Powell moved more decisively in a hawkish direction”

Stocks were volatile in afternoon trading after Fed Chair JeromePowell said current economic policy should remain in place amid sticky prices. “More recent data point to solid growth and continued strength in the labor market, but also to a lack of further progress this year in returning to our 2% inflation target.” – said the head of the central bank during a panel discussion. “Powell moved more decisively in a hawkish direction. It was unfriendly for the stock markets, but the markets got the message,” said Quincy Krosby, chief global strategist at LPL Financial.

Traders also monitored tensions in the Middle East after Iran fired missiles and drones at Israel on Saturday. Israeli Chief of Staff Herzi Halevi announced on Monday that Israel would respond to the Iranian attack that took place on the night from Saturday to Sunday. Axios reported that Israeli Defense Minister Joaw Galant said in a Sunday conversation with Pentagon chief Lloyd Austin that Israel had no choice but to retaliate for Saturday's Iranian missile attack. “There's certainly not much in the media reporting to encourage risk-taking, and the list of factors that can refrain from purchasing assets and manage exposures is growing,” said Chris Weston, head of research at Pepperstone.

Some analysts, however, indicate that markets hope that the Iran-Israeli conflict will not escalate. “Markets so far seem quite upbeat about rising tensions and are cautiously optimistic that Israel's response will be restrained and that all-out war will be avoided,” said Matthew Ryan, head of market strategy at Ebury.

There is no urgent need to lower interest rates

San Francisco Fed President Mary Daly said Monday that given the strong economy and labor market and inflation still above the Fed's 2% target, there is no urgent need to cut U.S. interest rates. According to LSEG data, investors estimate 48 bps this year. reductions, compared with approximately 150 bp. at the beginning of the year.

The Dow was supported by UnitedHealth's gain of more than 5%. due to better than expected first quarter revenues. Johnson & Johnson fell about 2%. following mixed quarterly results. Morgan Stanley shares rose 2.5%. after beating the consensus forecasts of analysts in both lines. Bank of America fell 3.5%. after announcing a decline in profit and revenue.

The largest American companies gave Wall Street reasons for optimism at the beginning of the new corporate earnings season. According to FactSet, of less than 10 percent companies listed on the S&P 500 index that have already reported financial data for the first quarter of 2024, almost 4 out of 5 exceeded the consensus of analyst expectations.

Macroeconomic data

Industrial production in the US increased by 0.4% in March. mdm. Production was expected to increase by 0.4%. mdm vs. +0.4 percent a month earlier, after correction from +0.1%. Industrial processing increased by 0.5%. mdm. It was forecast that processing would increase by 0.2%. mdm, compared to +1.2 percent a month earlier, after correction from +0.8%.

The number of housing starts in the US in March was 1.321 million on a SAAR basis. A month earlier, this indicator amounted to 1.549 million, after correction from 1.521 million. Analysts expected that the number of new investments would be 1.485 million. In month-to-month terms, the indicator decreased by 14.7%. vs. +12.7 percent in the previous month, after correction from +10.7%. Analysts predicted mdm -2.4%. The production capacity utilization of American companies was 78.4%. vs consensus 78.5 percent and against 78.2 percent a month earlier, after correction from 78.3 percent.

The number of new U.S. home building permits issued in March (an indicator of future activity in this sector) was 1.458 million on an annualized basis (SAAR), compared to 1.524 million in the previous month, adjusted from 1.518 million. Analysts expected that the number of new building permits issued would be 1.51 million. On the oil market, WTI contracts for May are down 0.15%. to USD 85.28 per barrel, and May Brent futures fall by 0.18%. up to USD 89.94/b.


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