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What to know this week
Stock markets closed the week with mixed results, as the debate over when, or if, the Federal Reserve will cut interest rates continued to be investors’ priority.
For the week, the Nasdaq Composite (^ IXIC) rose more than 1%, while the S&P 500 (^GSPC) was almost flat. The Dow Jones industrial average (^DJI) fell by more than 2%. All three indexes were still near record highs.
After a quiet week on the economic data front, a key reading of the Fed’s preferred inflation gauge is expected to greet investors next week. A second update on economic growth in the first quarter and a reading on consumer confidence are also on the economic calendar.
On the corporate front, earnings season is officially over, with Salesforce (CRM), Costco (COST), General Dollar (DG) and Best Buy (ABY) highlighting a lighter quarterly reporting schedule.
Markets will be closed on Monday for the Memorial Day holiday.
Evaluate debate
A Hotter-than-expected reading on US economic outputcombined with a hawk tone from Fed officials in the minutes of the central bank meeting in May, led investors to once again reduce expectations of interest rate cuts. Investors are now pricing in fewer than two cuts for the year, and the debate has shifted to whether or not the Fed will make its first cut by September.
On Friday, markets were predicting a 50% probability of the Fed not cutting in September, a notable change from the 70% probability that investors predicted a month ago. according to the CME FedWatch tool.
Goldman Sachs’ economic team rejected its call for the Fed’s first July-September cut on Friday, but noted that “the timing of the first cut remains a difficult question.”
Goldman’s chief U.S. economist David Mericle argued that his team still sees these cuts as “optional” given the strength of the economy seen in data like last week’s hotter-than-expected business activity reading. . Other things being equal, signs of strength in the economy “reduce the urgency” of cuts by the Fed, Mericle argued.
Mericle added that while Goldman expects inflation to “greatly improve” by September, it will likely still be above the Fed’s 2% target, increasing optionality.
With earnings season largely over, Truist Co-Chief Investment Officer Keith Lerner told Yahoo Finance that the discussion around the Fed, inflation and economic data will once again take center stage in markets in the near term.
“It just makes the market more volatile,” Lerner said.
Federal Reserve Chairman Jerome Powell holds a news conference following the central bank’s two-day monetary policy meeting in Washington, May 1, 2024. (REUTERS/Kevin Lamarque/File Photo) (Reuters/Reuters)
A new price check
The path of inflation remains crucial to the Fed’s rate-cutting schedule, and markets will get an update on any progress on Friday with the release of the Personal Consumption Expenditures (PCE) index.
The story continues
Economists expect April’s “core” PCE, the Fed’s preferred gauge that excludes volatile food and energy categories, to post a 2.8% annual gain, March flat increase. In the previous month, economists expect the “core” PCE to have risen 0.3%, also in line with last month’s variation.
Another economic growth update
US economic growth in the first quarter of 2024 was much weaker than economists expected. On April 25, the Bureau of Economic Analysis’s advance estimate of US gross domestic product in the first quarter showed that the economy grew at an annualized pace of 1.6% during the period, below the 2.5% growth expected by economists surveyed by Bloomberg.
The secondary reading is expected on Thursday, and economists believe that following downward revisions to retail sales data in February and March, the GDP number will fall to 1.3% at this reading. However, Bank of America US economist Michael Gapen wrote in a note to clients that this should not be an ominous sign about the health of the US economy.
“Final sales to domestic buyers (GDP minus trade and inventories) are expected to remain strong.” Gapen wrote. “The bottom line is that the economy moderated a bit in the first quarter, but remains stable overall.”
Earnings Overview
While Nvida’s long-awaited earnings release (NVDA) did little to move the broader market higherO AI leader’s earnings beat improved S&P 500 earnings growth in the first quarter.
At the beginning of the week, the S&P 500 was on track to grow 5.7%. Following Nvidia’s report, the index is now on track for 6% growth in the first quarter.
More importantly, strategists believe Nvidia’s outsized impact on earnings will diminish as the year progresses, supporting a broadening of the stock market rally.
Bank of America US and Canadian equity strategist Ohsung Kwon told Yahoo Finance that the first stage of the AI cycle is already happening, with profits growing at companies like Nvidia (NVDA) as well as tech giants like Alphabet (GOOG, Google), Amazon (AMZN) and Microsoft (MSFT) invest in growing technology. But the rewards are starting to expand, with recent rallies in sectors such as utilities and energy.
“We no longer think it’s just about Nvidia,” Kwon said. “Things are broadening out… into energy, commodities, utilities, things like that.”
Kwon noted in a recent research note that Nvidia drove 37% of the S&P 500’s earnings growth last month. Over the next 12 months, it is expected to represent just 9%.
The case of the S&P 6,000
A solid earnings outlook for the rest of the year is one of several factors that many strategists cite as they revise their year-end targets for the S&P 500. But Deutsche Bank chief equity strategist Binky Chadha told Yahoo Finance that while people are “talking bullish,” the stock’s positioning hasn’t changed much over the past three months. Deutsche Bank’s positioning measure shows that investors are “overweight” equities, but not at the “extreme” levels seen in 2021 and 2018.
This is one of several reasons why Chadha sees “upside risks” in his updated forecast for the S&P 500 to end 2024 at 5,500. Chadha believes there could be more room to compete in the shares, especially since he feels the consensus is not currently pricing in outperformance for the U.S. economy.
Chadha highlights that expectations for the US economy have just changed an approaching recession for growth at or slightly below the normal trend. If this consensus continues to rise and the US economy returns to growth more than expected this year, in the middle of what some believe it could be a productivity boom For the U.S. workforce, it’s not hard to see the S&P 500 hit 6,000, according to Chadha.
“We’ve come a long way, but it feels like we’re not all the way,” Chadha said.
Weekly Calendar
Monday
Markets are closed for the Memorial Day holiday.
Tuesday
Economic data: S&P CoreLogic Case-Shiller National Home Price Index year-over-year, March (+6.38% prior); Conference Board Consumer Confidence, May (96 expected, 97 previous); Dallas Fed manufacturing activity, May (-15 expected, -14.5 previous)
Earnings: Box (BOX), Armhole (CAVA)
Wednesday
Economic data: MBA Mortgage Applications, Week Ending May 24 (+1.9% Previous); Richmond Fed manufacturing index, May (-7); Federal Reserve Releases Beige Book
Earnings: Abercrombie & Fitch (ANF), Advanced Auto Parts (AAP), American Eagle (OAS), OMO (OMO), C3.ai (AI), rubber (CHWY), Dick’s Sporting Goods (DKS), HP (HPQ), Okta (OKTA), Sales force (CRM)
Thursday
Economic data: First quarter GDP, second estimate (expected annualized rate 1.3%, +1.6% previously); Personal consumption in the first quarter, second estimate (+2.1% expected, 2.5% previously); Initial unemployment claims, week ending May 25 (218,000 expected, 215,000 previously); Pending home sales, month-over-month, April (-0.6% expected, +3.4% previously); Preliminary April wholesale inventories month-over-month (-0.1% expected, -0.4% previously)
Earnings: Best buy (ABY), Birkenstock (BIRK), Build a Bear Workshop (BBW), Burlington Stores (BURL), Canopy growth (CGC), Costco (COST), General Dollar (DG), Standing cabinet (Florida), Hormel Foods (HR), Kohl (KSS), Marvell Technology (MRVL), MongoDB (MDB), Ulta Beauty (ULTA), Zscaler (ZS)
Friday
Economic data: Personal income, month-to-month, April (+0.3% expected, +0.5% previously); Personal spending, month over month, April (+0.3% expected, +0.8% previously); PCE inflation, month-over-month, April (+0.3% expected, +0.3% previously); PCE inflation, year-over-year, April (+2.7% expected, +2.7% previously); “Main” PCE, month-to-month, April (+0.3% expected, +0.3% previously); “Main” PCE, year-over-year, April (+2.8% expected; +2.8% previously)
Earnings: BRP (DOO.TO)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Latest news on July 11, 2024: Airtel says its new Xstream Fiber plans bundle over 350 live TV channels (Official Photo) (Reuters) Disclaimer: This is an AI-generated live blog and has not been edited by Hindustan Times staff.
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News / Business / Latest Business News Live Updates Today, July 11, 2024
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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