Financial future on the horizon: US stocks rise ahead of consumer price news – Forecasts – 11 April 2024


On Tuesday, ahead of the release of key inflation data, the Nasdaq and S&P 500 indices showed moderate growth, despite a decline in the financial sector. This happened ahead of the reporting season for leading US banks, which begins on Friday.

The Nasdaq Composite, supported by strength in semiconductors, posted a notable gain, while the S&P 500 gained minimally. The Dow Jones Industrial Average closed almost unchanged.

Investors were focused on Wednesday’s consumer price index, which could have a significant impact on the Federal Reserve’s interest rate adjustment decisions in light of recent positive economic data, including an impressive labor market report.

Among the large banks whose reports interested the market were JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc, which are included in the S&P banking index and showed a decline in their activity in recent trading.

“Financial companies’ first-quarter earnings typically set the pace for the entire season,” said Bill Northey, who serves as senior director of investments at U.S. Bank Wealth Management in Billings, Montana. “We see cyclical sectors as a measure of the overall health of the corporate landscape in the United States.”

Analysts predict that inflation will gradually decline toward the Federal Reserve’s target level of 2%. However, the National Federation of Independent Business on Tuesday reported optimism among small businesses fell to an 11-year low in March, with inflation as the top concern.

“The decline in small business sentiment is a key signal,” Green emphasized. “This is a repeat of the trend of recent years, where large companies feel confident, while small businesses experience significant difficulties.”

The Dow Jones Industrial Average fell 9.13 points, or 0.02%, to close at 38883.67. The S&P 500 rose 7.52 points, or 0.14%, to finish at 5209.91, while the Nasdaq Composite rose 52.68 points, or 0.32%, to close at 16306.64.

Of the 11 key sectors in the S&P 500, nine posted gains, with real estate posting the biggest gains. The financial services sector showed the least dynamics.

According to the latest forecasts from LSEG, overall first-quarter earnings growth for S&P 500 companies is expected to reach 5% year over year, down from initial expectations of 7.2% at the start of the quarter.

Stocks related to cryptocurrencies and blockchain technology fell, reflecting the decline in the value of Bitcoin. In particular, shares of Coinbase Global and software developer MicroStrategy lost 5.5% and 4.8%, respectively.

Moderna stock stood out, however, rising 6.2% after announcing positive results from an early-stage trial of a customized cancer vaccine developed with Merck.

Alphabet Inc shares also rose 1.1%, moving the company closer to the significant milestone of a $2 trillion market capitalization.

On the New York Stock Exchange, advancers outnumbered decliners by a 1.44-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by a 1.33-to-1 ratio.

Oil prices fell for the second day in a row as negotiations to reach a truce in Gaza continue, encountering obstacles from Egyptian and Qatari mediators. On Monday, Brent oil prices fell for the first time in the last five trading sessions, while the price of American oil fell for the first time in the last seven days.

The US dollar is showing stability amid investors’ anticipation of the upcoming US inflation data expected on Wednesday. Meanwhile, the Japanese yen remains near its multi-year lows, prompting vigilance among traders about possible moves by Japan to stabilize the currency.

Those expectations bode well for the big banks’ first quarterly earnings reports on Friday.

“We are on the verge of important inflation data and financial reports. Some investors may choose to adopt a more conservative strategy ahead of these key events,” said Jeff Kleintop, chief global investment strategist at Schwab.

“Despite the stock market’s strong first quarter performance, the question remains whether earnings were strong enough to support this development, and whether guidance from business leaders will be able to confirm the more confident growth expectations that the market has already priced in?”

At the beginning of the trading day, the shares showed growth, but then the dynamics weakened, and by the close of trading, some of them were able to partially recover lost positions.

Gene Goldman, chief investment officer at Cetera Investment Management, said: “With current high valuations and questions about the Federal Reserve’s rate plans, markets are reflecting the situation with perfect accuracy. Any higher-than-expected CPI reading could make it difficult to be optimistic about a Fed rate cut.”

The MSCI global equity index rose 1.32 points, or 0.17%, to 779.36, recovering from an earlier decline of about 0.5%.

Europe’s STOXX 600 index fell 0.61% as investors awaited a policy statement from the European Central Bank on Thursday, paying particular attention to any comments from President Christine Lagarde about a possible rate cut in June.

US Treasury yields fell in anticipation of the release of US inflation data.

Expectations for a rate cut in the US have weakened amid continued economic activity. Markets place the likelihood of a 25 basis point rate cut in June at about 56%, down from 61.5% last week, according to analysis from CME Group’s FedWatch tool.

The 10-year U.S. Treasury yield fell 6.6 basis points to 4.358%, down from 4.424% at the end of the previous day, while the 30-year yield fell 5.7 basis points to 4.4964%. with 4.553%.

The yield on two-year U.S. Treasury notes, which often reacts to changes in interest rate expectations, eased 5.1 basis points, falling to 4.7384% from 4.789% late Monday.

The foreign exchange market was little changed, with the US dollar index down 0.02% at 104.09, while the euro weakened 0.01% at $1.0857. Against the Japanese yen, the dollar lost 0.03% to settle at 151.74.

Japanese Finance Minister Shunichi Suzuki stressed the country is open to all options to deal with the yen’s excessive fluctuations, reiterating its readiness to act in response to the currency’s recent sharp decline.

In energy, despite ongoing instability in the Middle East, the US Energy Information Administration (EIA) has adjusted upward its forecasts for US crude oil production for the current and next years, and also raised its forecasts for global and domestic oil prices .

US oil prices fell 1.39%, or $1.20, to $85.23 per barrel. At the same time, Brent crude oil prices fell 1.06%, or $0.96, to trade at $89.42 per barrel.

Analysts said the spot price of gold hit a new record for eight straight sessions, supported by strong buying by central banks and rising geopolitical instability.

The price of spot gold increased by 0.57%, reaching $2,352.23 per ounce. At the same time, gold futures in the US showed an increase of 0.84%, settling at $2,351.40 per ounce.



Source link