Market Watch
Dow futures rose 120 points, S&P 500 futures 22 points, and Nasdaq 100 futures 140 points.
Wall Street futures surge after the Federal Reserve’s three interest rate cuts this year, with the Swiss National Bank becoming the first major central bank to do so. More central banks are expected. Reddit is set to begin trading.
Fed Decision
The U.S. Federal Reserve has reaffirmed plans for three quarter-percentage point cuts by the end of 2024, marking the first reductions since the Covid pandemic’s early days. Despite slower-than-expected progress towards the central bank’s 2% inflation target and robust economic growth, the Fed’s new policy statement describes inflation as remaining “elevated.” Updated quarterly economic projections show a 2.6% rate increase in the personal consumption expenditures price index excluding food and energy by the end of the year.
The US Federal Reserve has raised its expectations for annualized real GDP growth to 2.1% in March, up from 1.4% in December. The Fed is targeting the June FOMC meeting for the first cut, according to Goldman Sachs analysts.
The higher inflation forecast, 0.2pp above the current forecast of 2.4%, lowers the bar slightly for incoming data to meet the FOMC’s expectations and keep a June cut on track. The Fed expects cuts in June, September, and December, totaling three cuts in 2024.
Central banks meetings
The parade of major central banks continues with policy meetings from the Norges Bank, the Bank of England, and the Central Bank of the Republic of Turkey. UK inflation slowed more than expected in February, and the Bank of England is expected to keep rates unchanged.
Norway and Turkey are also likely to keep interest rates unchanged. The Swiss National Bank surprised markets by cutting its benchmark interest rate by 25 basis points to 1.5%, becoming the first major central bank to do so in this cycle.
Reddit price
Reddit, a popular social media platform, has raised $748 million in its first major public offering since 2019. The company, which hosts millions of online forums, sold 15.28 million shares, raising a total of $748 million.
The valuation of Reddit is about $6.4 billion. The company had been valued at $10 billion in a private fundraising round in 2021, but soaring inflation and interest rates in 2022 forced investors to downsize and focus on profit over growth. Despite losing money every year since its launch in 2005, Reddit’s revenue increased 20% last year to $804 million. The success of the IPO could give the ailing technology IPO market a boost. Reddit’s shares are expected to start trading on the New York Stock Exchange on Thursday.
Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Current Account
9:45 PMI Composite Flash
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
Other Key Events:
- Bank America Global Industrials Conference, 3/19-3/21, in London
- Goldman Sachs 7th Annual Healthcare Innovation Clinic, 3/21-3/22, in London
- NVIDIA GTC 2024, 3/18-3/21
- S&P Global 39th Annual World Petrochemical Conference, 3/18-3/22, in Houston, TX
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.