(Bloomberg) – Stock markets tumbled ahead of the weekend as traders shunned risky assets and the world’s biggest technology companies sold off amid geopolitical uncertainty.
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Stocks fell over the weekend, with the S&P 500 index rising to a record high and falling below 5,000 after growing wary of consolidation. Hawkish FedSpeak sounds and heightened inflation concerns weighed heavily on sentiment, with investors reducing their bets on a long-awaited change in central bank policy. Although recent tensions in the Middle East appear to be under control, traders opted for a cautious stance.
That said, nothing can be taken for granted and markets could remain nervous, especially given the looming weekend risks, says Fawad Razaqzada of City Index and Forex.com says. He added that inflation remained a focus as it could affect monetary policy.
“Stock markets have been down in recent weeks as expectations for interest rate cuts have fallen significantly,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth. “It's no surprise that investors are locking in some profits following market performance.” management.
The S&P 500 is trending lower for the sixth straight session, its longest losing streak since October 2022. The Nasdaq 100 fell 1.5%. The Magnificent Seven megacap stocks that powered this year's surge have slumped, with Nvidia down more than 4% and Apple closing at its lowest point in nearly a year. Netflix Inc. fell on the bearish outlook.
The VIX index, Wall Street's “fear gauge,” briefly exceeded 21, but the spike was later capped at 18.5.
The yield on the 10-year U.S. Treasury note fell 2 basis points to 4.61%, nearly erasing an earlier drop of 14 basis points. Oil pared previous strong gains and rose only slightly as Iranian media appeared to downplay the impact of the Israeli attack.
The stock market is headed for a third straight week of declines, the longest decline since September. After posting a 10% rise in the first quarter (the strongest start since 2019), investors are increasingly concerned about how high it will rise in the short term, even given the continued strength of the economy. I'm becoming skeptical.
“Geopolitical and political uncertainties, along with inflation, interest rates and the Federal Reserve, are putting pressure on the market, leading to rapid and dramatic shifts in market complexion and investor attitudes,” said Nationwide's Mark Hackett. “
Federal Reserve officials say they need to see more data to be confident that inflation is on track to its 2% target before starting to cut interest rates. . Investors have significantly reduced their bets on easing since the start of the year, with markets now seeing one or two rate cuts likely in 2024, up from six cuts a few months ago. However, it is decreasing.
Chicago Fed President Austan Goolsby said the stagnation in inflation growth merits a pause so future data can provide more insight into how the economy is unfolding.
In Bloomberg's latest monthly survey, economists lowered the probability of a recession over the next 12 months to 30%. This is the lowest probability since June 2022 and down from 35% last month. The study shows that the top of the Fed's benchmark interest rate target range, currently at 5.5%, will only fall to 4% by the end of 2025. This was just 0.5 percentage points higher than the respondent had expected a month ago.
Investors are pulling money out of stocks as a strong U.S. economy and persistent inflation raise concerns that the Federal Reserve will keep long-term interest rates high, Bank of America strategists say. .
In a note, Michael Hartnett's team wrote that good economic news is now bad news for stocks, a shift in thinking from the first quarter when “good news = good.” Citing data from EPFR Global, BofA said evidence of that was the $21.1 billion that investors redeemed from equity funds in the two weeks ending Wednesday, the highest amount in a two-week period since December 2022.
The companies that transport goods and act as bellwethers for the U.S. economy were in trouble this week.
The Dow Jones Transportation Average has fallen to levels last seen in November and is on track to end the month with a decline for the third consecutive week. The losses also pushed the index well below its 200-day moving average, a long-term trend indicator that traders watch. It is also the worst pace since October.
Sinead Colton-Grant, chief investment officer of BNY Mellon's wealth management division, said investors who had been hoarding cash had room to buy as the U.S. stock market retreated from record highs hit late last month. It is said that it is given.
He said the three-week decline in the S&P 500 was a healthy consolidation by traders after it soared 10% in the first quarter and rose 24% in 2023. Colton Grant expects the rally to not only resume from here, but expand based on strong earnings growth and continued economic momentum, with the S&P 500 index at the upper end of its target range of 5,000 to 5,400 before the end of 2024. We predict that it may exceed.
Company highlights:
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Trump Media and Technology Group is asking Nasdaq regulators to intervene, saying illegal short-selling may have been behind the stock's collapse.
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American Express Co. reported stronger-than-expected earnings for the first three months of the year as consumers continued to flock to the company's premium credit card products.
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Procter & Gamble Co., the maker of Pampers diapers and Dawn dish soap, reported quarterly sales that fell short of Wall Street expectations, overshadowing its improving profit outlook.
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SLB, the world's largest oil services provider, said it was preparing for a pick-up in northern hemisphere activity in the second quarter after starting the year with a typical seasonal slump.
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Super microcomputers fell after the server maker announced the date of its third-quarter earnings results but did not announce them in advance.
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The Federal Aviation Administration is investigating an incident in which a passenger appears to have been given unauthorized access to the cockpit on a United Airlines Holdings charter flight from Denver to Toronto.
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Nordstrom's founding family has notified the board of directors of their interest in taking the company private.
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Mondi has withdrawn from a bidding war with British packaging rival DS Smith, securing a deal with US bidder International Paper.
The main movements in the market are:
stock
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As of 12:59 p.m. New York time, the S&P 500 was down 0.5%.
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Nasdaq 100 falls 1.5%
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The Dow Jones Industrial Average rose 0.5%.
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MSCI World Index falls 0.6%
currency
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Bloomberg Dollar Spot Index little changed
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The euro rose 0.1% to $1.0654.
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The British pound fell 0.4% to $1.2390.
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The Japanese yen remained almost unchanged at 154.58 yen to the dollar.
cryptocurrency
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Bitcoin rose 0.8% to $64,027.31
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Ether fell 0.1% to $3,066.54.
bond
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The 10-year Treasury yield fell 2 basis points to 4.62%.
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German 10-year bond yield remains unchanged at 2.50%
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UK 10-year bond yields fell 4 basis points to 4.23%.
merchandise
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West Texas Intermediate crude rose 1% to $83.58 per barrel.
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Spot gold rose 0.9% to $2,399.73 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Farah Elbahrawy, Esha Dey, and Alexandra Semenova.
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