U.S. stocks were volatile on Thursday after lower-than-expected producer prices eased investor fears stemming from Wednesday’s surprise rise in consumer prices.
The Dow Jones Industrial Average (^DJI) fell 0.5%, and the S&P 500 (^GSPC) fell below the flatline, ending a decline in stocks that had seen it decline by about 1%. The Nasdaq Composite Index (^IXIC), which has a high proportion of high-tech stocks, rose about 0.4%.
Meanwhile, the 10-year U.S. Treasury yield (^TNX) traded around 4.53% after spiking on Wednesday to its highest level since November.
The producer price index rose 0.2% in March from the previous month, slower than economists expected. The year-on-year growth rate of 2.1% was also lower than expected. But the annual growth rate marked the fastest rise in producer prices in nearly a year.
Stocks fell and bond yields rose as investors reassessed expectations for Federal Reserve policy following a better-than-expected March Consumer Price Index (CPI) report. . Markets are currently pricing in only two rate cuts in 2024, which are expected to occur later this year than expected. A few analysts believe that depending on developments in economic indicators, it may not be possible to cut rates or even raise them.
Across the pond, the European Central Bank kept interest rates on hold at record highs, but sent a clear signal that a cut is coming.
read more: Impact of Fed interest rate decisions on bank accounts, CDs, loans, and credit cards.
Another headwind has come to the fore again: rising oil prices, amid growing concerns about a possible attack on Israel by Iranian forces. Crude oil futures fell, but remained near six-month highs, with West Texas Intermediate (CL=F) slightly below $86 per barrel, and Brent crude (BZ=F) at $90. It remained above .
Against this backdrop, there are hopes that first-quarter corporate results will provide momentum to stock prices, as there are limited signs that high borrowing costs will slow profits. As reports trickle in, investors are bracing for quarterly updates from some of the biggest U.S. banks, including JPMorgan (JPM), as the season begins in earnest on Friday.
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Nvidia stock rises 2%, helps keep Nasdaq in green territory
Nvidia (NVDA) stock rose more than 2% on Thursday. The AI chip maker’s stock helped keep the tech-heavy Nasdaq Composite Index (^IXIC) in green territory as other major averages fluctuated.
Nvidia shares rose after Raymond James analysts raised their price target for the company from $850 to $1,100. The company maintained a “strong buy” rating on AI darling.
Other chip stocks also rose during Thursday trading, including Broadcom (AVGO) and Super Microcomputer (SMCI).
The major averages were mixed Thursday. The Nasdaq Composite rose 0.4%, while the Dow Jones Industrial Average (^DJI) fell 0.5%. The S&P 500 (^GSPC) traded just below the flatline.
Oil retreats despite concerns of escalating tensions in the Middle East
Oil fell on Thursday despite concerns about escalating tensions in the Middle East. West Texas Intermediate (CL=F) futures fell almost 1% to below $86 a barrel, while international benchmark Brent crude oil (BZ=F) fell below $90 a barrel. It remained at .
Oil prices soared Wednesday following reports that the United States and its allies believe an attack on Israeli targets by Iran or its proxies is imminent.
Dennis Kistler, senior vice president at BOK Financial, said in a note to clients on Thursday that the short-term “Nervous trading will continue,” he said.
WTI is up 18% since the beginning of the year, while Brent is up 17% over the same period.
Fed’s Williams still expects rate cuts to ‘start this year’ despite ‘difficulties along the way’
Jennifer Schoenberger reports:
New York Fed President John Williams offered some reassurance to investors a day after another spike in inflation spooked markets, saying that if the economy progresses as expected, the economy will be phased in “starting this year.” He said it makes sense to cut interest rates.
“We expect inflation to continue its gradual recovery to 2%, but there will be some bumps along the way, as seen in recent inflation statistics,” he said in a new speech Thursday morning. Probably.”
He expects the Fed’s preferred inflation measure, the personal consumption spending index, to be between 2.25% and 2.50% this year, “before approaching 2% next year.” The central bank’s goal is to bring inflation back to 2%.
Please see here for the detail.
Stocks rise on wholesale inflation data
Stocks opened slightly higher on Thursday, reversing pre-market losses, after lower-than-expected producer prices helped calm fears of a reacceleration of inflation.
The Dow Jones Industrial Average (^DJI) traded almost flat, while the S&P 500 (^GSPC) rose 0.2% after rebounding from a drop of about 1% in the previous session. The Nasdaq Composite Index (^IXIC), which has a high proportion of high-tech stocks, rose 0.5%.
The producer price index rose 0.2% last month from the previous month, slower than economists expected.
New York Federal Reserve Bank President Williams offered some reassurance to investors after the consumer price index in March roiled the market, saying that if the economy progresses as expected, He said it would make sense to lower interest rates gradually starting this year.
“We expect inflation to continue its gradual recovery to 2%, but there will be some bumps along the way, as seen in some recent inflation statistics,” he said in a Thursday morning speech. Deaf,” he said.
Amazon’s shareholder letter is read out to NVIDIA
The last thing Nvidia (NVDA) bulls want to see this week as they watch their favorite stock enter correction territory is Amazon (AMZN) CEO Andy Jassy’s year in the mail, posted this morning. This is the next shareholder letter.
I thought Jassy’s comment about Amazon building its own AI chips was very interesting.
“To date, virtually every major underlying model has been trained on Nvidia chips, and we continue to offer the broadest collection of Nvidia instances of any provider. Supply is short and cost remains an issue As customers expand their models and applications, Our customers are asking us to push the boundaries of price performance for AI chips., similar to Graviton for generalized CPU chips. as a result, We built a custom AI training chip (named Trainium) and an inference chip (named Inferentia). In 2023, we announced the second version of our Trainium and Inferentia chips. Both offer significantly better value for money than the first version and other alternatives. This fall, Anthropic, a leading manufacturer of foundational models, announced that it will use Trainium and Inferentia to build, train, and deploy future foundational models. Several customers are already using our AI chipsAnthropic, Airbnb, Hugging Face, Qualtrics, Ricoh, Snap, and more.
Jassy’s super long post can be found here.
The day after the CPI drop
Yesterday was one of the shocking moments in the market.
We’ve all been through the worst of the stock market and seen even more eye-popping economic reports, so in that context it wasn’t shocking. Investors were caught off guard by the high inflation CPI report and just sold stocks because everyone else was telling them to sell.
Although the market has regained some calm this morning, futures prices remain under pressure and there is tension ahead of the PPI report.
A new survey of U.S. investors by J.P. Morgan also shows that street sentiment is not upbeat. Below, we see that investors’ appetite for holding stocks has sharply declined as expectations for interest rate cuts recede.
There is less appetite for owning stocks here. (JP Morgan)
