US stocks showed healthy growth while Indices pulled back. Chicago Fed President makes remarks on potential rate cuts and traders await the PCE at the end of this month. Continue reading to get your daily market analysis.
Nvidia Races Past Google as Mega Market-Cap Companies Gained
US stocks rose on Wednesday, bouncing back from Wall Street's drop in the last session. This happened as predictions about future interest rates adjusted after the release of unexpectedly high CPI data.
Wall Street gained some strength yesterday driven mainly by the most interest rate sensitive mega-caps such as Meta, Nvidia, Advanced Micro Devices, and Qualcomm which gained during the session between 1.6 % and 2.2%.
In the trading session, Nvidia's market value exceeded that of Alphabet, Google's parent company, just days before Nvidia, known for its AI focus, announced its fourth-quarter results.
Nvidia daily chart, February 15, 2024. Source: CAPEX.com WebTrader.
Indices Slide as the Dow Jones Spirals
Indices had fallen to more than one-week lows on Tuesday and the Dow Jones posted its worst day in 11 months, after a Core CPI figure of 3.9% year-over-year, double the Fed's inflation target, forcing investors to reassess their rate cut expectations.
Chicago Fed President Speaks on Rate Cuts
Euphoria around an early start to monetary policy easing had fueled a rally on Wall Street since November, paving the way for a bull market. However, policymakers may have to wait a little longer for more evidence of easing price pressures amid a resilient U.S. economy.
Comments from Chicago Fed President Austan Goolsbee offered some comfort. He said that reaching the 2% inflation goal is still possible, even if future price rises are a bit higher than anticipated. He also warned that the Central Bank shouldn't delay too much before lowering interest rates.
Bets on a rate cut of at least 25 basis points in May stood at 37%, down from 63% earlier in the week, while expectations for June stood at 78.6%.
January PCE: A Game Changer?
In any case, the inflation figure preferred by the Federal Reserve to evaluate the evolution of inflation is the Personal Consumption Expenditure data. It is important to note that the last Core PCE figure was already below 3%. At the end of the month, the PCE data for January is published and if it shows a continuation of the downward path that it has been experiencing in recent months, it could change the market scenario.
Key Takeaways
- Mega-cap stocks rallied as Nvidia, Meta, Alibaba, AMD, and Qualcomm gained between 1.6 % and 2.2%.
- Indices slump as the Dow Jones hit its lowest in nearly a year.
- Chicago Fed President made remarks to not put off rate cuts too long.
- January PCE data released on February 29th will give more clarity in rate decisions.
Sources: Bloomberg, Reuters
