US Stocks Notch Records Before Fed Decision
2024-06-12
Summary:
Nasdaq 100 and S&P 500 hit all-time highs Tuesday. Investors expect no Fed rate change, but the FOMC will release its economic projections.
The Nasdaq 100 and S&P 500 indices rose on Tuesday, ending at all-time highs. While investors expect no change to the Fed funds target rate, the FOMC is anticipated to release its Summary of Economic Projections.
The Nasdaq 100 index and the S&P 500 index surged on Tuesday, reaching record highs. While investors anticipate no change to the Fed funds target rate, the FOMC is expected to release its Summary of Economic Projections.
Investors' optimism about the timing of a Fed interest-rate cut is questioned by RBC Capital Markets strategists, who foresee an 8% potential decline in US stocks if easing does not materialize this year.
If the central bank cuts rates as expected but earnings fall short of projections, the S&P 500 could trade around 5,100 points - approximately 5% below current levels, they noted.
According to Goldman Sachs Group Inc.'s prime brokerage desk, fund managers have been consistently selling US technology stocks for the third consecutive week and have reversed their previous trading strategy.
Semiconductor stocks were the most heavily sold in terms of value for the week ending June 7 within the technology sector, while software stocks were the most purchased. It remains to be seen if this shift signifies a change in direction.
CBOE Global Markets data indicates that seven of the top 10 most traded US equities in May were penny stocks. The substantial trading volumes in these less-known stocks indicate a potentially overheated market.
There are few signs of a turnaround as technical indicators show. If the Fed turns more hawkish in any way later in the day, the 50 EMA could help stem the decline.
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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