Lingering Rate Uncertainty May Lead To Choppy Trading On Wall Street
May 21 2024 - 9:14AM
IH Market News
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.
Micron Technology (NASDAQ:MU)
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