STOCK INDEX FUTURES
The geopolitical situation between Israel and Iran will take center stage this week. How will Israel respond to the attack by Iran?
Last week, the S&P 500 fell by -1.46%, and the Nasdaq fell by -0.50%.
The retreat in stocks last week was primarily due to yet another hotter-than-anticipated consumer price index (CPI) report published on Wednesday. Traders reacted to the CPI data by paring back their Fed rate cut expectations.
All stock sectors we tracked were down during the week, with the most significant losses coming from the financial, healthcare, and materials sectors. Below are Goldman Sachs sector recommendations.
Stock Sector Performance Sheet 04-14-2024
Goldman Sector Recommendations 04-14-2024
Source: Goldman Sachs
EARNINGS SEASON
The first quarter (Q1) earnings reporting season for US companies begins this week. This is a time when investors closely watch the financial results of publicly traded companies, which can impact the overall stock market.
Here’s what traders will likely be paying attention to:
Strength of the US consumer: Company earnings can reveal how much consumers are spending, which is a crucial indicator of the overall health of the US economy.
Performance of the largest S&P 500 companies: Investors will be watching to see if these big companies meet analysts’ high expectations, who are predicting 15% sales growth and 32% earnings per share (EPS) growth.
Continued growth in Artificial Intelligence (AI): Investors are interested in seeing if companies continue to invest in and develop AI technologies, a rapidly growing field.
INTEREST RATE FUTURES
Traders reacted to the CPI data by paring back their Fed rate cut expectations and shutting the door on a 25 basis point cut in June. The market probabilities of a Fed rate cut have been pushed out into September.
Interest Rate Cuts on Hold for June:
Inflation is higher than expected: The Consumer Price Index (CPI) rose 3.5% in March compared to last year, higher than February’s numbers and analysts’ predictions.
Fed cautious about rate cuts: Federal Reserve officials are wary of cutting interest rates aggressively despite higher inflation. They believe it’s too early to change their plans.
Rate cuts are still possible, but later: While a June rate cut is no longer likely, there’s a chance for one in July (over 44%% chance) or September (39% price into futures markets) before the US election.
Published on: Apr 24, 2024
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