The U.S. stock indexes are stabilizing after experiencing their worst day in weeks, with the S&P 500 and Dow Jones Industrial Average both showing slight gains in morning trading. Cal-Maine Foods saw a 6% rise in its stock price after reporting better-than-expected profits by selling a record number of eggs. However, Intel faced a decline of 6.2% after revealing financial details about its foundry business, which is currently losing money. The stock market had experienced a significant surge from November through March but has since slowed down, raising concerns about the Federal Reserve’s interest rate cuts and overvaluation of stocks.
The Federal Reserve has hinted at the possibility of cutting its main interest rate three times this year, which could provide relief to the economy and boost investment prices. However, recent reports indicate stronger-than-expected economic growth, which might deter the Fed from implementing rate cuts as it could lead to inflationary pressures. Encouraging data on construction, retail, and other service sectors in the U.S. economy has been balanced by moderate growth, easing concerns about inflation.
A positive report on Wednesday showed growth in construction, retail, and other services businesses, although not as robust as economists predicted. Additionally, the Institute for Supply Management reported a decrease in the prices paid index, indicating a positive trend for inflation. The ADP Research Institute also reported stronger-than-expected job gains in the private sector, further supporting the economy. Traders are eagerly awaiting the U.S. government’s comprehensive job market report for March, which will likely impact market expectations for Federal Reserve rate cuts.
In the bond market, yields rose slightly, placing pressure on stocks. The 10-year yield increased to 4.39% from 4.36%, while the two-year yield, closely associated with expectations for Fed action, rose to 4.71%. Rising oil prices have also contributed to inflation concerns, with benchmark U.S. crude and Brent crude witnessing significant gains in 2024. European stock markets experienced mixed movements, while Asian markets fell following Wall Street’s losses from Tuesday, with indexes in Seoul, Tokyo, and Hong Kong declining. Analysts are closely monitoring inflation trends to gauge potential shifts in interest rates by central banks.
