Live Markets: Wall Street eyes a dovish wait

Cerillion

02/05/2024 15:43

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      U.S. stock indexes rise
    

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      Materials is weakest sector, energy and staples biggest
gainers
    

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      STOXX 600 down 0.08%
    

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      Dollar edges up, gold down, oil flat, bitcoin up >2%
    

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      U.S. 10-year Treasury yield up at 4.63%
    

  
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    WALL STREET EYES A DOVISH WAIT    
    Wall Street indexes were higher on Thursday with strategists
interpreting Wednesday afternoon's Federal Reserve statement and
Fed Chair Jerome Powell's press conference. 
    The market had suffered some mood swings on Wednesday after
the central bank's updates, with the S&P 500 rising more than 1%
on the day at one point before closing down 0.34%.
    Sonu Varghese, Global Macro Strategist at Carson Group, said
Powell’s remarks appeared dovish, as he implied the Fed's next
move would be a rate cut. 
    But Varghese said investors who sold may have been focused
on the idea that rates "remain higher for longer, at least until
we get a series of soft inflation prints that gives the Fed more
confidence that inflation is headed to 2%."
    And until those prints materialize, Varghese expects more
volatility while the market waits.  
    For now, Gene Goldman at Cetera Investment Management, said
that while the Fed may not cut rates soon, Powell appeared to
take one concern "off the market's worry list" by suggesting the
Fed would not hike rates.
    Also on the bright side, Carol Schleif, chief investment
officer at BMO family office, said she saw the Fed's plan to
slow its balance sheet reduction as "a moderate and welcome
surprise." 
    But Schleif also sees the Fed sitting "steady and patient
relative to moving on rates any time soon." 
    "In the meantime, data is coming in supportive of a bumpy
but steady trajectory toward the Fed's long term goal of 2%,"
she said. "The employment picture is coming into better balance
and consumer and business activity and sentiment is moderately
optimistic versus wildly exuberant."
    Interpreting changes in the Fed's written statement, Bill
Adams, chief economist for Comerica Bank, wrote that the Fed
will likely wait until September to kick off rate cuts. He
expects two quarter percentage point rate cuts by the end of
2024.
    Satyam Panday, chief U.S. economist at S&P Global Ratings,
expects to wait even longer for a rate cut. The firm has moved
expectations of a first rate cut to December from July. 
    Noting that the "cut is still conditional on economic growth
and inflation pressures slowing," Panday says the Fed is "likely
to pick up the pace of easing in 2025 as economic growth slows
below potential." Their projection is for 100 basis points of
cuts in 2025, to end next year at 4.00%-4.25%.
    In S&P 500 industry sectors, the biggest loser was materials
 .SPLRCM  while the biggest gainers were energy  .SPNY  consumer
staples  .SPLRCS .
    Trading snapshot from 1027 ET (1427 GMT):
    
    (Sinéad Carew)
     *****    
    
    FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
    
    U.S. INDEX FUTURES CLIMB EARLY AS INVESTORS DIGEST FED -
CLICK HERE
    
    A BALANCING ACT TO LURE INFLOWS INTO UK EQUITIES - CLICK
HERE
    
    THE UK HAS ITS PREMIUM STOCKS TOO! - CLICK HERE
    
    POST-DATA PRICE ACTION SUGGESTS STAGFLATION FEARS - UBS
-CLICK HERE
    
    SCOPE FOR MORE EPS UPGRADES IN EUROPE - BOFA - CLICK HERE
    
    STOXX GOING NOWHERE, "LOW QUALITY BEAT" FOR NOVO - CLICK
HERE
    EUROPE EYES MUTED START POST-FED - CLICK HERE
    INTERVENE, RINSE, REPEAT - CLICK HERE

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Wall Street rises as investors read Fed tea leaves    https://tmsnrt.rs/4doojBv
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