(Bloomberg) — Traders paused for breath after optimism about eventual Federal Reserve interest-rate cuts and easing inflation pushed the S&P 500 to a new record.
Most Read from Bloomberg
The rally in Big Tech that lifted the S&P 500 above 5,000 for the first time on Friday looked set to extend, as Amazon.com Inc. Nvidia Corp. and Tesla Inc. ticked higher in premarket trading. Moves beyond those standouts were muted, in S&P 500 and Nasdaq 100 futures trading as well as for US Treasuries and the dollar.
The next pressure point for markets is Tuesday’s consumer price index report. The annual US inflation rate is forecast to have dropped to 2.9% in January from 3.4% the prior month, according to consensus estimates of economists surveyed by Bloomberg.
That would be the first reading below 3% since March 2021, supporting a disinflationary trend that will determine the scope and timing of Federal Reserve rate cuts.
“As long as we see this gradual progress down, they should be in a position where they can feel confident of wanting to cut,” said Pooja Sriram, US economist at Barclays, referring to Fed policymakers. “It still looks like we are at a place where interest rates are elevated, they could bite into the economy and maybe there is scope for those to start to be pared. There really is no reason to keep rates at these levels for very long,” she added in an interview with Bloomberg TV.
Swaps markets suggest the Fed will carry out just four rate cuts in 2024, down from seven forecast at the end of last year, and only slightly more than the three penciled in by policymakers.
“Market pricing is trying to encourage central banks to get going and start cutting rates. Arguably, the market has been overexuberant in its encouragement recently,” Iain Stealey, international chief investment officer for fixed income at J.P. Morgan Asset Management, wrote in a note to clients. “Employment has remained strong, purchasing managers’ surveys are healthy and economic growth is robust.”
The yen held near a two-month low reached on Friday following comments from central bankers that the Bank of Japan will take its time raising rates. Japan’s currency has weakened against all its Group-of-10 peers this year.
Corporate Highlights
-
Shares in Italian luxury brand Tod SpA shares rose as much as 18% after the founding family said it had enlisted buyout firm L Catterton in a new attempt to take the company private.
-
Diamondback Energy Inc. reached an agreement to buy fellow Texas oil-and-gas producer Endeavor Energy through a $26 billion deal that will create the largest pure-play operator in the prolific Permian Basin.
-
PepsiCo shares gained after the beverage and snack company was upgraded to buy from neutral at Citi, which said lowered expectations for organic sales growth has created a “good set-up.”
Key events this week:
-
India CPI, Monday
-
Minneapolis Fed President Neel Kashkari, Fed Governor Michelle Bowman, Fed President Tom Barkin speak, Monday
-
ECB executive board member Piero Cipollone, chief economist Philip Lane speak, Monday
-
US CPI, Tuesday
-
UK unemployment, Tuesday
-
Japan producer prices, Tuesday
-
UK inflation, Wednesday
-
Eurozone GDP, industrial production, Wednesday
-
Indonesia presidential election, Wednesday
-
Bank of England Governor Andrew Bailey speaks, Wednesday
-
ECB governing council member Boris Vujcic and vice president Luis de Guindos speak
-
Chicago Fed President Austan Goolsbee speaks, Wednesday
-
Australia jobs, Thursday
-
Japan GDP, Thursday
-
UK GDP, Thursday
-
US initial jobless claims, retail sales, Thursday
-
Philippine central bank meeting on interest rates, Thursday
-
ECB President Christine Lagarde speaks, Thursday
-
Fed Governor Christopher Waller speaks, Thursday
-
Bank of England policy makers Catherine Mann, Megan Green speak, Thursday
-
US housing starts, producer prices, Friday
-
San Francisco Fed President Mary Daly, Fed Vice Chair for Supervision Michael Barr speak, Friday
Some of the main moves in markets:
Stocks
-
S&P 500 futures were little changed as of 7:10 a.m. New York time
-
Nasdaq 100 futures were little changed
-
Futures on the Dow Jones Industrial Average were little changed
-
The Stoxx Europe 600 rose 0.3%
-
The MSCI World index was little changed
Currencies
-
The Bloomberg Dollar Spot Index was little changed
-
The euro fell 0.1% to $1.0769
-
The British pound was little changed at $1.2616
-
The Japanese yen rose 0.2% to 149.00 per dollar
Cryptocurrencies
-
Bitcoin fell 0.4% to $47,926.7
-
Ether fell 0.7% to $2,487.5
Bonds
-
The yield on 10-year Treasuries declined two basis points to 4.15%
-
Germany’s 10-year yield declined four basis points to 2.34%
-
Britain’s 10-year yield declined five basis points to 4.04%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Robert Brand, Sagarika Jaisinghani and Richard Henderson.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
