Stocks March Higher, Despite Fading Hopes of a Fed March Rate Cut

Macroeconomic/ geopolitical developments

• US Q4 earnings reports continued in this week, with Goldman Sachs surpassing expectations, Morgan Stanley disappointing, Schlumberger relatively in line with expectations and Travelers and State Street beating forecasts.

• TSMC earnings slightly surpassed expectations, with a positive 2024 outlook for AI and their partnership with Apple seeing their stock surge and driving the wider tech sector higher.

• Apple faced early-year challenges as they received multiple downgrades in the first week of 2024, causing the stock to plummet. This past week Apple’s stock took a more positive turn, as Bank of America upgraded Apple, foreseeing a 23% surge in 2024.

• US Retail Sales beat expectations spiking by 0.6%, beating both the prior month’s 0.3% and the expected 0.4%.
• The Fed entered a blackout period on January 20th 2024, which concludes on February 1st, leading up to the FOMC meeting on January 30th and 31st. Analysts anticipate the Fed to maintain interest rates within the range of 5.25%-5.50%.

• March US interest rate cuts hopes diminished as futures traders, who were once confident in a 70% chance of a cut a month ago, have now scaled back their outlook closer to a 50% probability.

Global financial market developments

• US equity index futures advanced, pushing up to new multi month highs.
• US and European yields saw moves still higher, to multi week yield highs.
• The US Dollar Index posted solid gains.
• Gold futures sold off further, then bounced again, still in an intermediate-term range.
• Oil futures dipped and rebounded, with tensions still heightened in the Middle East.

Key this week

Central Bank Watch: Although the Fed have entered their blackout period, a bust week elsewhere for Central Banks, as we get interest rate decisions from the People’s Bank of China (PBoC) Monday, the Bank of Japan (BoJ) on Tuesday, the Bank of Canada (BoC) on Wednesday and the European Central bank (ECB on Thursday.

Macro Data Watch: Standouts this week are EU Consumer Confidence Tuesday, Global Flash PMI on Wednesday, S GDP and Durable Goods Tuesday and US PCE (MoM, YoY) on Friday.

Earnings Watch: A big week for earnings, with standouts being J&J, P&G, Netflix, Verizon, Tesla, ASM, Intel and Caterpillar.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued