U.S. stocks are on track to start the second quarter of 2024 on a strong note on Monday, as investors focus on a softening in the Federal Reserve's preferred inflation measure for signs of interest rate cuts this quarter.
Futures prices linked to the S&P 500 Index (^GSPC) and the Dow Jones Industrial Average (^DJI) rose about 0.3%. The blue-chip Dow Jones was eyeing the all-important $40,000 mark. Stocks related to the tech-heavy Nasdaq Composite Index (^IXIC) led the rise, rising about 0.4%.
Wall Street started 2024 on a high note. The benchmark S&P 500 index has set 22 new records in closing prices so far this year, as part of its best first quarter since 2019. Meanwhile, all three major averages have increased for five consecutive months.
Although markets were closed on Friday, this week's closely watched data, the Personal Consumption Expenditure Price Index, served to boost expectations for rate cuts this year. The index includes “core” PCE, the Fed's preferred measure of inflation. The report said core PCE rose 0.3% from the previous month, lower than economists expected. Fed Chairman Jerome Powell said Friday that the statistics were “in line” with what the Fed is looking for.
These statistics strengthened investors' expectations for a June interest rate cut. About two-thirds of investors are pricing in a rate cut at the Fed's June meeting, up from about 55% last Thursday, according to the CME FedWatch tool.
The macroeconomic highlight of the first week of the second quarter will be Friday's jobs report, which will be another important signal for the Fed.
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Why Alphabet's stock price is depressed
You might not have noticed, given the meteoric rise of AI stocks and the hype surrounding this technology, but Alphabet (GOOGL) stock isn't actually involved. Alphabet shares have increased 8% since the beginning of the year, lagging the Nasdaq Composite's 9% rise and the S&P 500's 10.16% rise.
Jefferies analyst Brent Till offered several reasons this morning as to why the stock is sucking wind.
What I find most interesting is the call for management concerns. CEO Sundar Pichai has had a difficult 12 months on the AI front, with the company falling behind Microsoft (MSFT) in AI and continuing to face concerns about AI bias. Is he being watched closely by investors? We're not quite there yet, but it's worth keeping an eye on.
Jeffries said:
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