At the onset of a week filled with central bank decisions across the globe, from the US to England and Japan, tech giants have spearheaded a notable rally in the stock market. This surge comes as investors anticipate a series of pivotal monetary policy announcements.
Among the most discussed topics, Apple Inc. (AAPL, Financial) is reportedly in negotiations to integrate Google's Gemini artificial intelligence engine into the iPhone, a move that has propelled Alphabet Inc. (GOOGL, Financial) shares upward. Meanwhile, Nvidia Corp. (NVDA, Financial) is at the center of high expectations ahead of its AI conference, with investors keenly awaiting news that could further fuel its impressive rally.
Anthony Saglimbene of Ameriprise emphasizes the importance of focusing on sectors driving substantial corporate profits, particularly highlighting the stark contrast in profit growth between Big Tech companies today and the profitless tech ventures that characterized the tech wreck at the turn of the century.
As Wall Street braces for more clarity on the Federal Reserve's stance on easing, the global economy awaits decisions that will set the monetary policy for nearly half of its constituents. This week marks the largest congregation of central bank decisions in 2024, affecting six of the ten most-traded currencies.
The stock market has seen a rebound, with the S&P 500 halting a three-day decline, the Nasdaq 100 rising by 1.2%, and a collection of tech megacaps, often referred to as the "Magnificent Seven," climbing over 2%. In the bond market, US two-year yields have reached new highs for 2024, reflecting diminishing expectations for imminent Fed rate cuts. The Japanese yen saw fluctuations following reports that the Bank of Japan might end its yield curve control policy.
With a packed schedule of central bank meetings ahead, experts from Brown Brothers Harriman, Win Thin, and Elias Haddad, predict a shift from the current calm to potential market volatility. Japan is notably anticipated to make a historic move by ending its negative interest rate policy, a decision that has led to a surge in yen futures positions.
Despite expectations of a shift in the Federal Reserve's rate-cutting timeline due to persistent inflation, Goldman Sachs economists have adjusted their forecast to three quarter-point cuts this year, aligning with the median forecast made by policymakers in December. This adjustment is primarily attributed to a slightly higher inflation path.
Investors are also focusing on the Fed's dot plot for insights into the expected number of rate cuts this year. The market is eager for reassurances from Fed Chair Jerome Powell that recent inflation data will not derail the Fed's plans, amidst speculation about the potential for a stable financial environment that could bolster equities and provide traditional benefits of fixed income in portfolios.
As the week unfolds, earnings reports from companies like FedEx Corp. (FDX, Financial), Nike Inc. (NKE, Financial), Lululemon Athletica Inc. (LULU, Financial), General Mills Inc. (GIS, Financial), and Darden Restaurants Inc. (DRI, Financial) will offer further insights into the US economic landscape and consumer spending trends.
Corporate updates include Nasdaq Inc. (NDAQ, Financial) resolving a premarket trading glitch, Exxon Mobil Corp. (XOM, Financial) expressing disinterest in acquiring Hess Corp. (HES, Financial), and Fisker Inc. (FSR, Financial) pausing production to manage inventory levels. Additionally, B. Riley Financial Inc. (RILY, Financial) missed its deadline for filing audited results, and PNC Financial Services Group Inc. (PNC, Financial) launched an advertising campaign emphasizing its stability.
Key events to watch this week include central bank decisions, housing starts, consumer confidence updates, and earnings reports, among others. These events are crucial for investors seeking to navigate the complexities of the current financial landscape.
