Market Watch: Wall Street is expected to maintain its winning streak, supported by substantial inflows, with optimism that Fed Chair Jerome Powell will suggest interest rate cuts at the Jackson Hole symposium.
Powell seen offering dovish tone
Wall Street is expecting dovish comments from Fed Chair Jerome Powell at the annual economic symposium in Wyoming.
Markets recorded their best week of the year, with major inflows into the S&P 500 index. Powell is expected to frame the Fed’s strategy for reducing rates, highlighting the central bank’s readiness to implement significant cuts if needed.
Evercore ISI expects Powell to affirm the Fed’s confidence in inflation trending back towards the 2% target, signaling rate reductions could commence as soon as September.
Paramount lawsuit
Paramount Global is facing a heated battle with media executive Edgar Bronfman Jr. submitting a $4.3 billion bid to acquire National Amusements, which owns a controlling stake. This move threatens to undo a planned acquisition by Skydance Media founder David Ellison. Skydance reached an agreement to buy out the Redstone family’s controlling stake in Paramount Pictures.
The company reported revenue of $13.64 billion, with adjusted profit per share of 87 cents. Cisco plans to cut 7% of its global workforce, incurring a pretax charge of up to $1 billion.
S&P 500 Inflow
Investor sentiment has shifted, leading to substantial inflows into the S&P 500 index. Positive economic data and easing inflationary environment have boosted investor confidence.
Net positioning rose across US indexes, with the S&P seeing larger risk flows. Notional positioning rose by almost $18bn, with the majority coming from new longs. Short positions have reduced, but risks are mitigated by their smaller size.
Economic Calendar
- 01:35 PM Fed’s Bostic Speech
- 02:45 PM Fed’s Barr 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.