Market: record-breaking fireworks on Wall Street

(CercleFinance.com) - Wall Street posted a 3rd consecutive session of record gains, with the 3 main indices smashing new records, with a new series of 'doubles': intraday record/closing record.


Investors welcomed - according to a majority of comments - the Federal Reserve's announcements.... with perhaps one positive over-interpretation: bond markets don't have the same 'rose-colored glasses' reading and are far from enthusiastic about the prospect of three rate cuts this year (compared with 7 to 8 expected by the end of 2023).

Returning to the record fireworks, the day's records were set by means of upward "gaps", which is indicative of a genuine climate of euphoria.

The Dow Jones gained +0.8% to 39,860, the S&P500 peaked at 5,261 but ended at 5,241 (+0.3%), the Nasdaq gained +1% to 16.530 but ended on a modest +0.2% at 16,400pts, the Nasdaq-100, which had soared +1.1% to 18,458, ended at 18,320 (+0.45%), i.e. the day's low.

The day's stars on the "tech" side were Micron with +14.1%, far ahead of Broadcom +5.6%, then Lam research +3.5%, Illumina +3.2%, Applied materials +2.8%, NXP +2%.
The S&P500 was driven for the second session running by financial stocks and brokers, with Goldman Sachs +4.4%, Trust Financial +3.3%, Blacrock +3%, State Street +2.9%, Raymond James +2.8%, Bank of America +2.1%.

Apple fell by -4.1% (worst session since the end of August 2023), as the company is the subject of legal proceedings - with a potentially heavy fine at stake - for abuse of dominant position (practices falling under the Anti-Trust Act) with its iPhones, which have a 64% market share in the United States.

Shortly after the close, FEDEX announced earnings 10% ahead of expectations and a $500 million increase in its share buyback program, bringing the total plan to $5 billion.

The Fed is sticking to its target of three rate cuts in 2024, followed by three further reductions in the cost of money in 2025.

Traders now rate the probability of a June rate cut at almost 72%, compared with 60% before the Fed meeting, according to the CME's FedWatch barometer.

As is often the case when a flurry of economic indicators is published in the space of a few hours, this does not impact US indices, because there is always a 'reassuring' figure among those whose content is less positive.

Investors discovered that US sales of existing homes rose more than expected, according to the NAR, by 9.5% between January and February to reach 4.38 million annualized and seasonally adjusted.

The median sale price reached $384.500, up 5.7% year-on-year (impact of high mortgage rates undetectable), and the stock of unsold existing homes rose by 5.9% to 1.07 million at the end of February, or 2.9 months at the current rate of absorption.

Growth in the US private sector was slightly less dynamic in March, despite good form in manufacturing.

According to S&P Global's latest PMI survey of managers, the composite flash index - which measures activity in services and industry - eased to 52.2 this month, compared with 52.5 last month.

In the services sector, the PMI fell to 51.7, after 52.3 in February, but recovered to 52.5 in the manufacturing sector, from 52.2 last month, reaching an almost two-year high.

The index of leading indicators in the United States rebounded in February, thanks in particular to a healthy stock market, announced the Conference Board on Thursday.

This leading indicator, which is supposed to foreshadow the general trend in the US economy over the coming months, rose by 0.1% last month, following a decline of 0.4% in January (compared to the expected -0.2%).

Despite this positive surprise, the ConfBoard says it sees a number of factors likely to weigh on growth, which it sees slowing in the second and third quarters due to the impact of high interest rates on consumer spending.

Almost 24% of companies reported an increase in overall activity this month, while 21% reported decreases; 52% reported no change.

The new orders index returned to positive territory for the first time since October, rising from -5.2 in February to 5.4 in March. The current shipments index rose by 1 point to 11.4 in March, its highest level since August 2022.

Overall, companies continued to report a decline in employment. The employment index rose by 1 point to stand at -9.6 in March, its 11th negative figure in the last 13 months.

On the bond market, treasuries literally ignored the day's figures and reacted very timidly to the Fed's press release: after -1Pt the previous day, the '10-yr' rallied by +1Pt to 4.2750%.

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