Stock Market News for Apr 2, 2024

U.S. stock markets closed mixed on Monday to start second-quarter 2024 trading. Market participants booked some profits while trying to guess the Fed’s future course of actions regarding the benchmark lending rate. Moreover, yields on U.S. government bonds surged following strong economic data. The Dow and the S&P 500 ended in negative territory while the Nasdaq Composite finished in positive zone.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.6% or 240.52 points to close at 39,566.85. Notably, 21 components of the 30-stock index ended in negative territory and 9 ended in positive zone. The blue-chip index is a little above 1% away to breach the crucial technical barrier of 40,000 for the first time in its history.

The tech-heavy Nasdaq Composite finished at 16,396.83, rising 0.1% due to good performance by technology bigwigs. The major gainer of the tech-laden index was Micron Technology Inc. MU. The stock price of the semiconductor giant surged 5.4%. Micron currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 slid 0.2% to finish at 5,243.77. Eight out of 11 broad sectors of the broad-market index ended in negative territory, while three in positive zone. The Real Estate Select Sector SPDR (XLRE), the Health Care Select Sector SPDR (XLV) and the Consumer Staples Select Sector SPDR (XLP) fell 1.8%, 0.9% and 0.8%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was up 4.9% to 13.65. A total of 10.22 billion shares were traded on Monday, lower than the last 20-session average of 12 billion. Decliners outnumbered advancers on the NYSE by a 1.90-to-1 ratio. On Nasdaq, a 1.73-to-1 ratio favored declining issues.

Fed’s Rate Cut in Focus

Market participants are continuously guessing regarding the Fed’s market interest rate trajectory. On Mar 6, the Fed Chairman Jerome Powell said the central bank is likely to initiate interest rate cuts this year but not any time soon. However, on Mar 7, he indicated that interest rate cuts may not be too far off if the inflation rate moves in line with the Fed’s expectations in the near future.

On Mar 20, after the FOMC meeting, the Fed kept the benchmark lending rate constant in the range of 5.25-5.5%. The range of the Fed fund rate has been steady since July 2023. However, the Fed’s latest “dot-plot” (a closely watched matrix of anonymous projections from the 19 officials who comprise the FOMC) shows the benchmark lending rate coming down to 4.625% at mid-point by the end of 2024. The existing mid-point of the Fed fund rate is 5.375%. This indicates three rate cuts of 25 basis points each.

However, two key Fed officials - Governor Christopher Waller and Atlanta President Raphael Bostic - have said that they will prefer less than three rate cuts of 25 basis points each in 2024. This week as many as 13 Fed officials will give their statements regarding rate cut policy. Investors will keenly watch their preferences about future movement of the Fed fund rate.

Following these developments, yield on the benchmark 10-Year U.S. Treasury Note was up 13 basis points to 4.319%.

Economic Data

The Institute of Supply Management reported that manufacturing PMI (purchasing managers’ Index) expanded in March after contracting for 16 consecutive months. The metric for March came in at 50.3%, beating the consensus estimate of 48.6%. The metric for February was 47.8%. Notably, any reading above 50% indicates expansion of manufacturing activities.

Construction spending declined 0.3% in February in contrast to the consensus estimate of an increase of 0.7%. Construction spending dropped 0.2% in January. However, the metric for February climbed 10.7% year over year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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