Lingering Rate Uncertainty May Lead To Choppy Trading On Wall Street
March 01 2024 - 9:05AM
IH Market News
The major U.S. index futures are currently pointing to a roughly
flat open on Friday, with stocks likely to show a lack of direction
after ending the previous session mostly higher.
Traders may take a step back to assess the near-term outlook for
the markets after yesterday’s gains lifted the Nasdaq and S&P
500 to new record closing highs.
While yesterday’s in-line inflation data added to optimism about
the Federal Reserve eventually cutting interest rates, the timing
of the first rate cut remains uncertain.
A rate cut later this month has largely been ruled out, but CME
Group’s FedWatch Tool is currently indicating a 21.7 percent chance
of a quarter point rate cut in May and a 67.6 percent chance of a
rate cut by June.
Traders may also be reluctant to make significant moves ahead of
key economic events next week, including congressional testimony by
Fed Chair Jerome Powell and the monthly jobs report.
Stocks fluctuated over the course of the trading session on
Thursday but largely maintained a positive bias before ending the
day mostly higher. The major averages all moved to the upside, with
the Nasdaq and S&P 500 reaching new record closing highs.
The Nasdaq and S&P 500 reached new highs for the session in
late-day trading before giving back some ground going into the
close.
The tech-heavy Nasdaq jumped 144.18 points or 0.9 percent to
16,091.92 and the S&P 500 climbed 26.51 points or 0.5 percent
to 5,06.27.
Meanwhile, the narrower Dow spent most of the day bouncing back
and forth across the unchanged line before closing up 47.37 points
or 0.1 percent at 38,996.39.
The strength on Wall Street came following the release of a
highly anticipated Commerce Department report showing consumer
prices in the U.S. increased in line with economist estimates in
the month of January.
The Commerce Department said consumer prices rose by 0.3 percent
in January after inching up by a revised 0.1 percent in
December.
Economists had expected consumer prices to rise by 0.3 percent
compared to the 0.2 percent uptick originally reported for the
previous month.
Excluding food and energy prices, core consumer prices climbed
by 0.4 percent in January after edging up by a revised 0.1 percent
in December. The increase in core prices also matched
estimates.
Meanwhile, the report said the annual rate of consumer price
growth slowed to 2.4 percent in January from 2.6 percent in
December. The slowdown matched expectations.
The annual rate of core consumer price growth also slowed to 2.8
percent in January from 2.9 percent in December, in line with
estimates.
“The report was largely in line with economist estimates, which
was seen a relief for investors who were concerned about the
potential for hotter than expected inflation to start the year,”
said Sam Millette, Director of Fixed Income for Commonwealth
Financial Network.
The inflation readings are said to be favored by the Federal
Reserve, and the data generated some optimism about the outlook for
interest rates.
In other U.S. economic news, the Labor Department released a
report showing a bigger than expected increase in weekly jobless
claims, while a report from the National Association of Realtors
unexpectedly showed a sharp pullback by pending home sales in
January.
Computer hardware stocks saw substantial strength the day,
resulting in a 3.3 percent spike by the NYSE Arca Computer Hardware
Index.
Pure Storage (NYSE:PSTG) led the sector higher, with the data
storage company soaring by 25.0 percent after reporting better than
expected fourth quarter results and providing upbeat guidance.
Significant strength was also visible among semiconductor
stocks, with the Philadelphia Semiconductor Index surging by 2.7
percent to a record closing high.
Gold stocks also turned in a strong performance amid an increase
by the price of the precious metal, driving the NYSE Arca Gold Bugs
Index up by 2.6 percent.
Housing, software and commercial real estate also saw strength
on the day, while networking stocks showed a notable move to the
downside.
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