Fed in No Hurry to Cut Rates Amongst Conflicting Data – March 8 Recap
Indices
- Dow 38,722, -365 or -0.93%.
- Nasdaq 16,085, -189 or -1.16%.
- MSCI EAFE 2357.74, +53.84 or +2.34%.
- S&P 5,123, -14 or -0.27%.
- USD10Y 4.089%, -9.1bp or -2.18%.
- WTI Crude $77.84 bbl, -$1.89 or -2.37%.
Fed in No Hurry to Cut Rates Amongst Conflicting Data
Fed Chair Jerome Powell testified to Congress this week stating that there are no signs of recession and that while monetary policy is restrictive, the Fed needs to see more evidence of declining inflation before starting to cut rates. Amid that backdrop, the economic data was extremely contradictory this week as U.S. Services displayed weakness (deflationary), the ADP Private Payrolls report was also weaker (deflationary), Initial Jobless Claims were in line with expectations (neutral), Average Hourly Earnings were down (deflationary), the Unemployment Rate ticked higher (deflationary), and yet the Non-Farm Payrolls report was very strong (inflationary).
This Week: Mar 11 – Mar 15
As a result of last week’s confusing data, the markets will look to the upcoming Consumer (CPI) and Producer Price (PPI) Indices for clues as to whether a June rate cut is still on the table or if stubborn inflation data will delay the Fed’s first rate cut decision until their following meeting, in late July.
Earnings continue to trickle in with Adobe (ADBE), Oracle (ORCL), Kohl’s (KSS), and Williams-Sonoma (WSM) all on the docket but none are expected to move markets.
Economic Calendar
- Monday – N/A. Earnings: Oracle (ORCL).
- Tuesday – February Consumer Price Index (CPI). Earnings: Kohl’s (KSS).
- Wednesday – N/A. Earnings: Williams-Sonoma (WSM).
- Thursday – Initial Jobless Claims, Producer Price Index (PPI). Earnings: Adobe (ADBE).
- Friday – March Empire State Manufacturing Survey. Earnings: N/A.
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Last Week‘s Daily Trading Recap…
Monday – Dow -98 to 38,989, Nasdaq -67 to 16,207, S&P -6 to 5,130, USD10Y +3.9bp to 4.219%.
- Seven of eleven S&P sectors traded higher today, led by Utilities, Real Estate, and Materials.
Tuesday – Dow -405 to 38,585, Nasdaq -268 to 15,940, S&P -52 to 5,079, USD10Y -8.2bp to 4.137%.
- Eight of eleven S&P sectors traded down today, led lower by Technology, Consumer Discretionary, and Real Estate.
- February ISM Services Index was 52.6% vs 53% expected and vs last month’s 53.4% print.
- February S&P U.S. Services PMI was 52.3 vs 51.3 expected vs and last month’s 51.3 print.
- Earnings: Target (TGT) beat earnings and revenue expectations; TGT traded up +12%. Ross Stores (ROST) beat top and bottom-line expectations but traded down -1.79% post close. JW Nordstrom (JWN) beat their earnings and revenue expectations but guided 2024 lower; JWN traded down -9.43% in the extended session.
Wednesday – Dow +76 to 38,661, Nasdaq +92 to 16,031, S&P +26 to 5,104, USD10Y -3.3bp to 4.104%.
- Nine of eleven S&P sectors traded higher today, led by Utilities, Technology, and Consumer Staples.
- February ADP Private Payrolls were lower than expected at +140,000 vs +150,000 expected and vs last month’s +107,000 print.
- January Job Openings and Labor Turnover Survey (JOLTS) revealed 8.9 million open positions, in line with expectations and unchanged from last month.
Thursday – Dow +130 to 38,791, Nasdaq +241 to 16,273, S&P +53 to 5,157 (new record close), USD10Y -1.2bp to 4.092%.
- Nine of eleven S&P sectors traded higher today, led by Technology, Communication Services, and Materials.
- Jobless claims fell to 217,000, vs 217,000 forecast and vs. last week’s slightly revised higher print of 217,000 (originally 215,000).
- Earnings: Broadcom (AVGO) beat earnings and revenues but did not guide 2024 forecast higher; AVGO traded down -3% post close. Costco Wholesale (COST) missed their revenue estimate and traded down -4% in the extended session.
Friday – Dow -69 to 38,722, Nasdaq -188 to 16,085, S&P -34 to 5,123, USD10Y -0.3bp to 4.089%.
- Six of eleven S&P sectors traded down, led lower by Technology, Consumer Staples, and Materials.
- February U.S. Non-Farm Payrolls were strong at +275,000 jobs created vs +198,000 expected and vs January’s +229,000 print.
- The February U.S. Unemployment Rate surprisingly ticked up to 3.9% vs 3.7% expected, and vs last month 3.7% figure.
- February U.S. Hourly Wages ticked down to +0.1% vs +0.2% expected and vs last month’s hot +0.5% number.
If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, AVGO, BITB, ETHE, and GBTC.