S&P 500 Looking to Gain Footing Near Record High

The S&P 500 (Index: SPX) dipped during the first full trading week of March 2024. The index closed out the week at 5,123.69, a little less than 0.3% below where it ended the previous week.

Never-the-less, the index did manage to eke out a new record high close of 5,157.36 on Thursday, 7 March 2024. That high came in response to strong signals from Fed officials that they will indeed act to cut interest rates later in 2024. Investors currently expect the Fed to begin cutting interest rates in the U.S. in June 2024 to address a slowing economy. In that action, the Fed will be lagging behind the example of the European Central Bank, which is expected to begin cutting its interest rates to address the weak Eurozone economy as early as later this month.

The Fed’s confirmation followed last week’s hint from Fed officials that they plan to implement a new kind quantitative easing-style program to provide some relief from elevated interest rates, which had pushed the index up to its previous record high close on Friday, 1 March 2024.

In the latest update to the alternative futures chart, we find the trajectory of the S&P 500 is still running in the upper half of the latest redzone forecast range.

That forecast range assumes investors will remain closely focused on 2024-Q2 in setting the level of the index, which aligns with investor expectations of the Fed’s interest rate cuts starting in June 2024.

Monday, 4 March 2024

• Signs and portents for the U.S. economy:

• Oil settles lower on weak demand despite OPEC+ cut extension
• US corporate debt euphoria could stall as Fed tightens liquidity

Fed minions says in no hurry to cut rates:

• Fed’s Bostic: No urgency to cut interest rates given US economy’s strength

Bigger trouble developing in China:

• China’s services activity growth momentum softens in Feb, Caixin PMI shows

JapanGov minions thinking it’s time to admit years of deflation are over:

• Japan government considers calling end to deflation, Kyodo reports

Dow, S&P, and Nasdaq ended lower while yields bumped up

• US stocks end lower ahead of Powell, jobs data; bitcoin surges

Tuesday, 5 March 2024

• Signs and portents for the U.S. economy:

• Oil falls 1% on concerns over China’s economic growth plan
• US banks far more exposed than Europeans to property crunch, says Morgan Stanley
• US services sector slows in February; inflation moderating

Bigger stimulus developing in China:

• China vows to ‘transform’ economy, sets ambitious growth target
• China’s Li vows more support for property market stuck in the doldrums
• China aims for self-reliance in tech; vows to open manufacturing to foreign investors

BOJ minions get more data saying they should end never-ending stimulus, face reckoning with the zombies it created:

• Japan seeing signs of positive wage momentum, says senior official
• Japan faces a reckoning with its zombie companies

Wall Street’s bull run falters as Nasdaq, S&P, Dow notch worst day since mid-February

• Tech-heavy Nasdaq leads Wall Street lower as megacaps, chips slide
• Mounting US rate cut bets fuel gold to record highs
• Instant view: Bitcoin rises to record high

Wednesday, 6 March 2024

• Signs and portents for the U.S. economy:

• Oil prices up 1% on small build in US crude stocks, Fed rate cut remarks
• US labor market steadily easing as job openings, resignations decline

Fed minions say rate cuts are coming, but probably fewer:

• Fed’s Powell still expects rate cuts, but inflation progress “not assured”

• Fed’s Powell: Don’t expect a soft landing victory lap

Fed’s Kashkari sees two rate cuts at most this year

Bigger stimulus developing in China:

• China’s 5% growth target for 2024 achievable, state planner says

• Can China maintain growth and ‘transform’ its economy at the same time?

Bigger trouble developing in China:

• China’s exports likely slowed in Jan-Feb as factories struggle

Data likely to push BOJ minions into ending never-ending stimulus soon:

• Japan sees growing momentum towards March end to negative rates

Nasdaq, S&P, Dow end higher after Fed chair Powell’s testimony yields no surprises

• Wall Street indexes advance as Fed’s Powell fuels hopes for rate cuts this year
• Gold extends record run as rate cut bets gain ground

• Powell’s comfort aside, gold’s record run could signal central banks’ inflation fear

Thursday, 7 March 2024

• Signs and portents for the U.S. economy:

• US layoffs reach highest since last March
• Oil prices nearly flat as market weighs Chinese demand, North America supply increase
• U.S. bank profits drop 44% in Q4 as big firms cover failed bank costs

• Regional banks face big hurdles a year after SVB collapse

Fed minion claims Fed “not far” from rate cuts, but note “remotely close” to digital currency:

• Fed’s Powell: “Not far” from confidence needed to cut rates

• Powell says Fed not “remotely close” to a central bank digital currency
• Fed’s Powell still expects rate cuts, but inflation progress “not assured”

Fed’s Bowman: “Not yet” ready for rate cuts, willing to hike again if needed

Fed’s Mester still sees rate cuts later this year

Global growth signs developing in China:

• China’s exports top forecasts as global demand returns

Bigger stimulus developing in China:

• China growth target achievable if backed by more stimulus, analysts say

BOJ minions inching closer to ending never-ending stimulus:

• BOJ’s growing confidence in prices, wages shifts focus to March meeting

ECB minions signal rate cuts coming to Eurozone in June 2024:

• ECB lays ground for June rate cut as inflation falls
• ECB cuts growth, inflation projections

S&P closes at new record high while Nasdaq, Dow also rise ahead of jobs report

• S&P index error may have sparked turbulence in Morgan Stanley, Pfizer shares, traders say

Friday, 8 March 2024

• Signs and portents for the U.S. economy:

• Oil dips 1%, posts weekly loss as markets weigh Chinese demand
• US job market data bolsters Fed’s ‘no rush’ rate cut view
• US labor market cooling; unemployment rate rises to two-year high of 3.9%

Fed minion says interest rates aren’t affecting economy:

• Fed’s Williams: Neutral rate is likely still low

Mixed economic signs developing in China:

• China’s February new yuan loans seen retreating from record high
• China’s CNOOC makes 100 million ton oilfield discovery in South China Sea
• China EV sales slow in January-February; price-cutting intensifies

BOJ minions getting excited to end never-ending stimulus later this month:

• BOJ leaning toward exiting negative rates in March – sources

ECB minions getting excited to cut Eurozone interest rates:

• ECB policymakers line up behind upcoming rate cut
• Markets see clearer ECB rate-cut roadmap as inflation fog lifts
• Exclusive: Some ECB policymakers float back-to-back June, July cuts, sources say

Wall Street slips from records with Nasdaq leading declines

• Gold marches higher as US jobs data boosts bets of early rate cut

The CME Group’s FedWatch Tool continues to project the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% until 12 June 2024 (2024-Q2), unchanged from last week. The Fed is expected to begin a series of quarter point rate cuts starting on that date, continuing into mid-2025 at six-to-twelve week intervals.

Meanwhile, the Atlanta Fed’s GDPNow tool‘s latest estimate of real GDP growth for the first quarter of 2024 (2024-Q1) bumped up to +2.5% after last week’s +2.1% projection.

Image Credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a bull being hoisted by a helicopter just below the top of a tall mountain. The mountain is labeled ‘S&P 500′.”