The Financial Future Is Coming: US Stocks Rise Ahead of Consumer Price News – Forecast – April 11, 2024

On Tuesday, ahead of key inflation data, the Nasdaq and S&P 500 indexes rose modestly despite declines in the financial sector. This comes ahead of the reporting season for major US banks, which begins on Friday.

Thanks to the strength of semiconductors, the Nasdaq composite index showed a notable rise, while the S&P 500 index rose slightly. The Dow Jones Industrial Average closed little changed.

Investors were focused on Wednesday’s consumer price index, which could have a significant impact on the Federal Reserve’s decision to adjust interest rates in light of recent positive economic data, including an impressive labor market report.

Among the big banks that have reported interest in the market are JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc, which are included in the S&P Bank Index and have seen activity decline in recent trading.

“A financial company’s first-quarter performance typically sets the pace for the entire season,” said Bill Northey, senior director of investments at U.S. Bank Wealth Management in Billings, Montana. “We view cyclical sectors as a gauge of the overall health of the U.S. business environment.”

Analysts expect inflation to gradually decline toward the Fed’s 2% target level. But the National Federation of Independent Business reported Tuesday that small business optimism fell to an 11-year low in March, with inflation the biggest concern.

Green emphasized that “the decline in small business sentiment is a key signal.” “This is a repeat of the trend of recent years, with large companies gaining confidence and small and medium-sized companies facing great difficulties.”

The Dow Jones Industrial Average closed at 38883.67, down 9.13 points (0.02%). The S&P 500 index closed at 5209.91, up 7.52 points (0.14%), and the Nasdaq Composite Index closed at 16306.64, up 52.68 points (0.32%).

Nine of the 11 major sectors in the S&P 500 posted gains, with real estate posting the biggest gain. The financial services sector showed the lowest dynamism.

According to LSEG’s latest forecast, overall first-quarter earnings growth for S&P 500 companies is expected to reach 5% year-over-year, down from an initial estimate of 7.2% at the start of the quarter.

Stocks related to cryptocurrency and blockchain technology fell, reflecting the decline in the value of Bitcoin. In particular, stock prices of Coinbase Global and software development company MicroStrategy fell 5.5% and 4.8%, respectively.

However, Moderna’s stock price stood out, rising 6.2% after announcing positive results from early-stage testing of a customized cancer vaccine developed with Merck.

Alphabet Inc shares also rose 1.1%, bringing its market capitalization closer to the important milestone of $2 trillion.

On the New York Stock Exchange, advancers outnumbered decliners by a ratio of 1.44 to 1. On Nasdaq, rising companies outnumbered falling companies by a ratio of 1.33:1.

Oil prices fell for a second day in a row as ceasefire negotiations in the Gaza Strip continued, encountering difficulties between Egyptian and Qatari mediators. The price of Brent crude oil fell on Monday for the first time in five trading sessions, while the price of U.S. crude fell for the first time in seven days.

The US dollar is holding steady as investors look forward to US inflation data expected on Wednesday. Meanwhile, the Japanese yen remains at its lowest level in years, raising caution among traders about Japan’s moves to stabilize its currency.

These expectations bode well for the big banks’ first quarterly earnings reports due on Friday.

“We have important inflation data and financial reports ahead. Some investors may choose to adopt a more conservative strategy ahead of these key events,” said Jeff Kleintop, Schwab’s chief global investment strategist.

“Despite the stock market’s strong first quarter performance, questions remain whether earnings will be robust enough to support these developments and whether guidance from business leaders will confirm the more robust growth expectations the market has already reflected.”

Although stock prices were on the rise at the beginning of the trading day, dynamics weakened later, and some stocks were able to partially recover lost positions as trading closed.

Gene Goldman, Chief Investment Officer at Cetera Investment Management, said: “With valuations currently high and questions about the Fed’s interest rate plans rising, the market is reflecting the situation with complete accuracy. Higher-than-expected CPI numbers could make forecasts more difficult. Optimistic about a Fed rate cut.”

The MSCI Global Stock Index rose 1.32 points (0.17%) to 779.36, showing signs of recovery from a previous drop of about 0.5%.

Europe’s STOXX 600 index fell 0.61% as investors awaited the European Central Bank’s policy statement on Thursday, paying particular attention to President Christine Lagarde’s comments on a possible June interest rate cut.

U.S. Treasury yields fell on expectations of the release of U.S. inflation data.

Expectations for a U.S. interest rate cut weakened as economic activity continued. The market now sees the odds of a 25 basis point rate cut in June at about 56%, down from 61.5% last week, according to analysis by CME Group’s FedWatch tool.

The US 10-year yield fell 6.6bp from 4.424% the previous day to 4.358%, and the 30-year yield fell 5.7bp to 4.4964%. It is 4.553%.

The yield on two-year U.S. Treasury bonds, which often react to changes in interest rate expectations, fell 5.1 basis points to 4.7384% from 4.789% on Monday afternoon.

There was little change in the foreign exchange market. The U.S. dollar index was down 0.02% at 104.09 and the euro was down 0.01% at $1.0857. Against the Japanese yen, the dollar was trading at 151.74, down 0.03%.

Japanese Finance Minister Shunichi Suzuki reiterated Japan’s readiness to respond to the recent plunge in the value of the yen, emphasizing that the country is open to all options to deal with excessive volatility in the yen.

In the energy sector, despite ongoing instability in the Middle East, the U.S. Energy Information Administration (EIA) raised its forecast for U.S. crude oil production for this year and next year, as well as global and domestic oil price forecasts.

U.S. oil prices fell 1.39% ($1.20) to $85.23 per barrel. At the same time, the price of Brent crude oil fell 1.06% ($0.96) to trade at $89.42 per barrel.

Analysts said spot gold prices hit new records for the eighth consecutive time, driven by strong buying by central banks and increasing geopolitical instability.

Spot gold prices rose 0.57% to $2,352.23 per ounce. At the same time, US gold futures were trading at $2,351.40 per ounce, up 0.84%.