Market Watch: Dow futures contract fell by 20 points, while S&P 500 futures rose by 4 points and Nasdaq 100 futures rose by 35 points.
Fed chief Jerome Powell visits Capitol Hill, Wall Street trades range, Microsoft resigns from Open AI board, and weak Chinese inflation data suggests slowing economic recovery.
Powell returns to Capitol Hill
Federal Reserve Chair Jerome Powell returns to Capitol Hill for his semi-annual Congressional testimony, highlighting the labor market cooling as a crucial factor in deciding when the US central bank will start cutting interest rates. He noted that reducing policy restraint too late could weaken economic activity and employment. Market participants view these comments as preparation for a September cut.
Microsoft has resigned as an observer at OpenAI’s board
Microsoft has resigned as an observer at OpenAI’s board, following regulatory scrutiny in the US and Europe. The company stated that its observer position was unnecessary due to the company’s improved governance over the past eight months. OpenAI will now host regular stakeholder meetings with strategic partners like Microsoft and Apple. Microsoft’s $10 billion investment in OpenAI has sparked concerns among antitrust watchdogs in Europe, Britain, and the US.
Chinese consumer inflation decreased
Chinese consumer inflation decreased for a 20th consecutive month in June, while producer inflation contracted for the 20th consecutive month. This slow recovery is attributed to consumers reining in discretionary spending, high unemployment, and concerns over a property market downturn. The weak CPI reading suggests potential stimulus measures by the Chinese government.
Economic Calendar
- 07:00 AM MBA Mortgage Applications
- 10:00 AM Powell delivers semi-annual monetary policy testimony
- 10:00 AM Wholesale Inventories (Preliminary)
- 10:30 AM EIA Petroleum Status Report
- 01:00 PM Results of $39B, 10-Year Note Auction
- 02:30 PM Fed’s Goolsbee and Bowman Speech
- 07:30 PM Fed’s Cook Speech
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Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow, the benchmark and tech-heavytouched record marks last week.
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow,
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
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MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
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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.