Equities fall as Powell saps cut bets
2024-02-06
Summary:
Wall Street, Europe shares dip after Fed Chair Powell adjusts expectations. A strong job report makes six expected cuts unlikely.
Shares on Wall Street and in Europe fell on Monday after Fed Chair Jerome Powell re-anchoring expectations. The Fed meeting and a strong jobs report make six cuts that had been priced in highly unlikely.
Powell said in an interview on Sunday that almost all the FOMC member think a policy pivot will occur over the course of 2024. He expects inflation to keep falling in the first half of this year.
Non-manufacturing PMI in the US increased to 53.4 last month from 50.5 in December according to the ISM. A measure of new orders received by services businesses rose to 55.0 from 52.8.
Some of Wall Street’s biggest optimists become cautious. A higher number of companies' Q4 results missed analyst expectations than historically, said a Goldman Sachs research note on Monday.
Deutsche Bank AG data showing that aggregate equity positioning among rules-based and discretionary funds is in the top quarter of observations going back to 2010 out of FOMO.
Magnificent Seven companies carry a 33% premium to the index in terms of forward price-to-earnings, data compiled by Bloomberg show. Nvidia hit another record high overnight om AI prospects.
The S&P 500 sits comfortably above the ascending trend line despite some recent correction triggered by profit-taking. It will likely face a barrier at 5,000 overhead.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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