March 11, 2024
Good morning,
Last week, we heard from Fed Chair Powell reiterating his patient stance in front of Congress, noting that while rate cuts are expected later this year, additional evidence of disinflationary trends is necessary first. The first evidentiary data for J Powell came Friday morning. The February jobs report was unusually ambiguous – there was something for everyone in the details of the report. Most importantly, there was nothing in the report that would alter last week’s message to Congress. The next three Fed meetings are on March 20, May 1, and June 12 and markets are currently pricing a 25% probability for a May cut, and a 70% probability for June.
Two weeks ago, we saw several +1% daily moves in the major stock indexes that resulted in a small gain at the end of the week. Same last week. Stocks rallied early in the week, which was primarily fueled by continued money flow into the semiconductor space. However, chip stocks experienced a sharp intraday reversal on Friday, which may suggest the rally has gone “too far too fast”. For the week, the S&P 500 Index lost a whopping -.26%.
We have CPI Tuesday and PPI Thursday this week – key Fed inflation data. For a market with good upside momentum, but overdue for a correction, the elevated volatility resulting in sideways (corrective) behavior should continue.
Be well,
Mike
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