US Stocks Remain Under Pressure – Nasdaq Down Another 1.15%
US Stock markets experienced another negative day yesterday despite treasury yields and the dollar taking a breather from the recent moves higher. The Dow dropped just 0.12% but the other two major indexes took bigger hits, the S&P losing 0.58% on the day and the Nasdaq falling 1.15%. US treasury yields fell back from recent highs, the 2-year off 3.8 basis points to 4.926% and the 10-year falling 6.3 basis points to 4.594%. Oil prices took a dip as demand concerns emerged to supersede Middle East supply fears, Brent losing 3% on the day to trade down to $87.29 per barrel and WTI dropping 3.1% to $82.69 per barrel and Gold had another quiet day retreating 0.2% to close around the $2,376 mark.
Fed Rate Cut Expectations in Focus
As the great and good of the central bank world gathered in Washington DC this week, the main ‘take’ from recent speeches has been a pretty dramatic turnaround for Jerome Powell and the FOMC. Just a few months ago in January, the market was pricing in 160 basis points worth of rate cuts in 2024 with the first cut coming in March, now we are looking at just 41 points worth of cuts and the first move not coming until September. We have seen some good moves in markets as these expectations have moved the dial, but many think there could be a lot more impact than the moves we have witnessed in the last week or two. Stock indexes are still close to historic highs, and they are probably most at risk from a significant correction and there is plenty of room for more appreciation in the dollar against most of the majors, so hold on to your hats, we could be in for a bigger ride than many investors are prepared for in the next couple of months!
Calmer Trading Conditions Could Push Markets Ahead Today
The macroeconomic calendar looks to be a lot quieter today and that could see smoother trading conditions that push markets further. We do kick off the day with some significant data out of Australia in the form of the latest employment numbers which could hit the Aussie and local markets but is unlikely to change overall momentum. After that, the rest of the Asian day and the London session has very little scheduled. Once New York opens we do have a bit more that could influence markets, we have the usual weekly unemployment claims numbers as well as the Philly Fed Manufacturing Index release. Later in the day, the central banker circuit picks up again with Fed members Bowman, Williams, and Bostic all set to give updates.
