From Nasdaq:

After a promising holiday rally, Wall Street has faced a turbulent start to the year due to concerns about the Federal Reserve’s policies. The S&P 500 broke a 10-week streak of gains, Treasury bonds and corporate credit markets also suffered substantial drops, and an unexpectedly strong jobs report clouded the outlook for interest rate cuts.

Investors have experienced a reversal from the late 2023 market rally as all major asset classes suffered losses in the first week of the new year. Exchange-traded funds (ETFs) tracking equities and fixed income both declined significantly, marking the worst start to a year since the creation of popular bond ETFs in 2002. Expectations of a March interest rate cut by the Federal Reserve were nearly certain in late December, but have since been scaled back, raising questions about the market’s earlier confidence.

The repricing of expectations drove 10-year Treasury yields back to 4%, retracing more than half of the decline since Fed Chair Jerome Powell laid the groundwork for monetary easing later this year. Many bullish investors are now questioning whether they had pushed their optimism too far after December’s euphoria. Despite headwinds and increased corporate issuance, it was the complacency surrounding central bank policy that fueled much of the market volatility, according to Bloomberg.

As the new year began, Wall Street had high expectations after a spirited holiday rally. However, investors have faced unexpected hurdles, including renewed concerns about the Federal Reserve’s policies. The S&P 500 experienced its first decline in 10 weeks, breaking a streak of gains that hadn’t been seen in almost two decades. Treasury bonds and corporate credit markets also saw substantial drops, making for a challenging beginning to the year. For traders anticipating interest rate cuts in March, a stronger-than-expected jobs report further clouded the outlook. The root cause of this disillusionment can be traced back several weeks when investors abandoned bearish positions and embraced various high-risk assets. With a dwindling pool of new buyers, bullish investors were left questioning whether they had pushed their optimism too far after December’s euphoria.

In a reversal from the late 2023 market rally, all major asset classes suffered losses in the first week of the new year. Exchange-traded funds (ETFs) tracking equities and fixed income both declined significantly, marking the worst start to a year since the creation of popular bond ETFs in 2002. Despite headwinds and increased corporate issuance, it was the complacency surrounding central bank policy that fueled much of the market volatility, according to Bloomberg. The repricing of expectations drove 10-year Treasury yields back to 4%, retracing more than half of the decline since Fed Chair Jerome Powell laid the groundwork for monetary easing later this year. Bullish investors were left questioning whether they had pushed their optimism too far after December’s euphoria



Read more: 2024 Kicks Off With Wall Street Turmoil, Federal Reserve Policy Concerns Spark Investor Uncertainty