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Amidst the ebbs and flows of the stock market, U.S. equities made slight movements while awaiting a plethora of Federal Reserve speakers scheduled for the day.
Fed Signals on Rates
Last week, the central bank tempered expectations of a rate cut, with Chair Jerome Powell reinforcing that stance over the weekend. Market participants are now eagerly anticipating whether more officials will echo the recent message from the Fed.
Stock Performance
Wall Street’s major averages opened on a positive note but have since struggled to find a clear direction. The Nasdaq Composite was down 0.43%, the S&P 500 was lower by 0.13%, and the Dow was holding onto marginal gains of 0.18%. The market witnessed seven of the 11 S&P sectors in the green, with Materials leading the gainers and Technology topping the losers.
Market Sentiment
Following the Fed’s statements on a potential rate cut, and recent economic data reflecting strength in the economy, investors have recalibrated their expectations for policy loosening. This shift led to surging Treasury yields, reaching their highest levels for the year over the last three sessions as bonds were sold off.
Treasury Yield Movement
Notably, yields saw a decrease ahead of a $54B 3-year note auction, with the 30-year yield down 4 basis points, the 10-year yield down 6 basis points, and the 2-year yield down 5 basis points.
Expert Insights
Jim Reid from Deutsche Bank highlighted the significant rise in the 10-year Treasury yield, the largest two-day jump since June 2022. This volatility underscores the market’s reaction to the prospect of tighter monetary policy.
Additionally, U.S. economists at Deutsche Bank revised their outlook, no longer anticipating a mild recession in the first half of 2024 and projecting robust 2024 real GDP growth at 1.9%. They expect the first rate cut to come in June, with a total cut of 100 basis points by the Fed within the year.
Fed Speaker Engagements
Today, multiple Fed speakers are scheduled to provide insights into the central bank’s deliberations. Cleveland Fed President Loretta Mester reiterated the appropriateness of current monetary policy and cautioned against premature rate cuts. Minneapolis Fed President Neel Kashkari, Boston Fed President Susan Collins, and Philadelphia Fed President Patrick Harker are also set to address market participants.
Market Focus
Market observers noted that markets seem more fixated on policy expectations rather than economic fundamentals, highlighting the disconnection between market sentiment and real economic indicators.
Stocks in Focus
Turning to individual stocks, notable movements were seen based on earnings reports. GE HealthCare (GEHC) witnessed a surge after registering a quarterly top and bottom-line beat, while Eli Lilly (LLY) reached a record high on the back of robust quarterly sales performance in particular product segments. Further, Spotify (SPOT) witnessed a surge following a substantial increase in quarterly monthly active users and subscribers.
