Stock Bull Run Wavers at End of Historic Quarter: Markets Wrap – Yahoo Finance

March 28, 2024

(Bloomberg) — A strong quarter in stocks puts traders on guard as they brace for key inflation data after the latest FedSpeak boosts confidence that policymakers are in no hurry to cut interest rates. It is ending with .

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Wall Street’s relentless rally, which has pushed stocks up $4 trillion this year, comes as Federal Reserve President Christopher Waller said he wants to see “improvement in inflation statistics for at least a few months” before cutting interest rates. So, I lost momentum. Even solid economic data failed to move the needle ahead of the Fed’s preferred inflation numbers and Chairman Jerome Powell’s remarks on Friday, when markets close.

“There’s a point to be made when you title your speech ‘There’s no rush yet,'” says Peter Boockvar, author of the Book Report. “Waller, like voting member Rafael Bostic, wants to wait, but he’s probably only hoping for one or two cuts this year.”

The S&P 500 index hovered around 5,250. The two-year bond yield rose 3 basis points to 4.6%. The bond market was scheduled to close at 2pm New York time. Swap traders reduced their bets on Fed easing, with contracts showing the implied probability of a rate cut in June was about 60%. The dollar was on an upward trajectory on a quarterly basis.

“Rightly or wrongly, unless inflation continues to rise and the labor market appears to be contributing significantly to the rise, we’re looking at a rate cut in June,” said Chris Larkin of Morgan Stanley’s E-Trade. “Our expectations will probably remain the same.”

“We remain of the view that conditions should be suitable for the Fed to cut rates by its June meeting,” said Solita Marcelli of UBS Global Wealth Management.

In economic data, the government’s two main activity indicators, gross domestic product (GDP) and personal consumption expenditure, showed strong growth at the end of last year. Consumer sentiment rose markedly towards the end of March, supported by strong stock market gains and expectations that inflation will continue to ease.

Chris Zaccarelli of the Independent Advisor Alliance said a strong economy driven by resilient consumers is paving the way for another strong earnings season starting next month.

“Those who still hold on to the idea that the much-anticipated 2023 recession is just around the corner are missing out on a great 15 (if not 17) months in the stock market. “That’s what happened,” Zacarelli said.

The S&P 500 will end the year at 5,300 as the consensus estimate for U.S. real GDP rose in a positive sign for stocks, said Lori Calvasina of RBC Capital Markets, who raised her target from 5,150.

“We believe that the market’s view of where the economic fundamentals are heading, rather than the view of any particular economist or strategist, ultimately drives stock market pricing.”

The S&P 500 has passed this year’s milestone, despite some concerns that the market may become too overheated in the wake of the rally. However, with its current “undefeated” record, technical indicators suggest that its momentum is not slowing down anytime soon.

The Relative Strength Index, a benchmark gauge that measures price momentum, ended 100 consecutive trading sessions with values above 50 as of Wednesday’s close, according to data compiled by SentimenTrader. According to the analysis, the S&P 500 index rose each time over the subsequent two-month, three-month, six-month, and 12-month periods after exhibiting similar price momentum strength.

The valuation of the equal-weighted S&P 500 has risen to 17 times earnings, according to Goldman Sachs Group, but the index could continue to rise even though it has traded above its fair value in the past. It is said that it shows. Strategists led by Ryan Hammond.

“For investors concerned about overvaluation and risks to the economic outlook, our options strategists note that downside protection is attractively priced,” the strategists wrote.

The unrelenting bull market has propelled the S&P 500 index up 10% this year, marking two straight quarters of double-digit gains.

After World War II, data compiled by Bespoke Investment Group found that even after achieving such feats, there was a slight decline in the following month, and a year later, the stocks were up an average of 12.27%.

“I wouldn’t be surprised if the stock market recedes in the near term, but history would suggest it’s too early for the stock market to decline,” said Ryan Grabinski of Strategas Securities. Ta.

Grabinski looked back at the past five months, when the S&P 500 index also rose about 27%. Out of 130 observations, he found only one with a negative return after 12 months.

Company highlights:

Home Depot announced that it will acquire building materials distributor SRS Distribution for approximately $18.25 billion to strengthen its professional services business.
Walgreens Boots Alliance has downgraded its outlook for fiscal 2024, citing a difficult retail environment including a decline in consumer spending.
B. Riley Financial Co., a blue-chip investment bank facing questions about its dealings with a former business partner, has won extra time to provide missing financial data to lenders.
Palantir Technologies has been put up for sale by Mones Crespi Hart & Co., citing a “horribly high” valuation.
Estée Lauder has raised a buy on Bank of America Corp. as the company’s profits have bottomed out.
Country Garden Holdings, once China’s top real estate developer, has warned that it will miss a deadline to report its annual results because more information is needed for proper accounting.

This week’s main events:

Good Friday. Exchanges in the United States and many other countries were closed due to public holidays. The US federal government is open.
US Personal Income and Expenditures, PCE Deflator, Friday
San Francisco Fed President Mary Daly speaks on Friday
Federal Reserve Chairman Jerome Powell speaks on Friday

The main movements in the market are:

stock