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Lingering Rate Uncertainty May Lead To Choppy Trading On Wall Street

iHub News
Latest News
May 21 2024 9:14AM

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction following the mixed performance seen in the previous session.

Traders may take a step back to assess the recent strength in the markets, which has seen the major averages climb to new record highs.

Renewed confidence the Federal Reserve will lower interest rates in the coming months has contributed to the advance, but recent comments from some Fed officials have once again created some uncertainty.

While the likelihood rates will be lower by September remains high, the chances have fallen to 75.3 percent from close to 90 percent last week, according to CME Group’s FedWatch Tool.

Another quiet day on the U.S. economic front may also keep some traders on the sidelines ahead of the release of the minutes of the Fed’s latest monetary policy meeting on Wednesday.

The minutes of the April 30-May 1 meeting may shed additional light on Fed officials’ thinking with regard to the outlook for rates.

After an early advance, the major U.S. stock indexes moved in opposite directions over the course of the trading session on Monday.

The tech-heavy Nasdaq added to last week’s strong gains, reaching a new record closing high, while the Dow gave back ground after closing above 40,000 for the first time last Friday.

The Nasdaq ended the day up 108.91 points or 0.7 percent at 16,794.87. The S&P 500 also crept up 4.86 points or 0.1 percent to 5,308.13, but the Dow fell 196.82 points or 0.5 percent at 39,806.77.

The advance by the Nasdaq reflected strength in the tech sector, with semiconductor stocks turning in a particularly strong performance on the day.

Reflecting the strength among semiconductor stocks, the Philadelphia Semiconductor Index jumped by 2.2 percent to a two-month closing high.

Chipmaker Micron Technology (NASDAQ:MU) helped lead the way higher, surging by 3.0 percent after Morgan Stanley upgraded its rating on the company’s stock to Equal Weight from Underweight.

Ai darling Nvidia (NASDAQ:NVDA) also shot up by 2.5 percent ahead of the release of its fiscal first quarter results after the close of trading on Wednesday.

Gold stocks also saw notable strength on the day, as the price of the precious metal reached a new record high, while banking stocks and telecom stocks moved to the downside.

A steep drop by shares of JPMorgan Chase (NYSE:JPM) weighed on the Dow, with the financial giant tumbling by 4.5 percent after ending last Friday’s trading at a record closing high.

The pullback by JPMorgan came after CEO Jamie Dimon implied during remarks at the company’s annual investor day that he may retire in fewer than five years.

Overall trading remained somewhat subdued, however, as traders seemed reluctant to make more significant bets amid a lack of major U.S. economic data on the day.

The economic calendar remains relatively quiet throughout the week, although reports on durable goods orders and new and existing home sales may attract some attention along with the minutes of the latest Fed meeting.