From Dow Jones & Company:

The U.S. stock market is looking at a potential “no landing” scenario for the economy, with strong January job reports, corporate earnings, and Fed Chair Jerome Powell’s comments pointing to a resilient economy and steady inflation. Despite this, the Dow Jones and S&P 500 indexes both reached record highs last week, while the Nasdaq Composite remains lower than its peak. The possibility of a rate cut by the Fed in March has decreased to 20.5%, and the chance of starting a rate cutting program in May stands at 58.6%. Stronger-than-expected January jobs data further eliminates the chance of a rate cut in March, with the economy adding 353,000 new jobs and hourly wages rising by 0.6%. The Fed’s term funding program for banks will expire on March 11. Concerns around regional banks are also on the rise, with New York Community Bancorp signaling challenges in the commercial real estate sector. However, among the 220 S&P 500 companies that reported their earnings so far, 68% have beaten estimates. Big tech companies, including Microsoft, Apple, Meta, and Amazon, reported their financial results for the fourth quarter of 2023, with okay earnings and negative guidance. Investors will be watching ISM services sector data, the U.S. trade deficit, and weekly initial jobless benefit claims numbers next week, as well as speeches from several Fed officials. Traders should go risk-off before May, according to some experts, while others remain optimistic about the future of risk assets.

The past week has seen the busiest economic data and corporate earnings reports so far this year, with U.S. stocks ending at or near record highs. The Dow Jones and S&P 500 both achieved record closes, while the Nasdaq Composite remains lower than its peak. The Fed kept its policy interest rate unchanged in the range of 5.25% to 5.5% at its Wednesday meeting as expected. Fed Chair Jerome Powell threw cold water on market expectations that the central bank may start cutting its key interest rate in March. The possibility of a rate cut by the Fed in March has decreased to 20.5%, and the chance of starting a rate cutting program in May stands at 58.6%. The U.S. economy added 353,000 new jobs in January, and the hourly wages rose by 0.6%. Among the 220 S&P 500 companies that have reported their earnings so far, 68% have beaten estimates. However, the reported earnings by big tech companies have been okay, but the guidance was not according to some analysts. New York Community Bancorp triggered the steepest drop in regional bank stocks since March 2023 and signaled challenges in the commercial real estate sector with troubled loans. The Fed’s bank term funding program, which was launched in March last year to bolster the capacity of the banking system, will expire on March 11. Investors should go risk-off before May, according to some experts, while others remain optimistic about the future of risk assets.

Investors have just gone through the busiest week so far this year for economic data and corporate earnings reports, with stocks ending at or near their record highs. The Dow Jones Industrial Average finished the week with its ninth record close of 2024, the S&P 500 index scored its seventh record close this year on Friday, and the Nasdaq Composite is about 2.7% lower from its peak. The Fed kept its policy interest rate unchanged in the range of 5.25% to 5.5% at its Wednesday meeting, as expected. The possibility of a rate cut by the Fed in March has decreased to 20.5%, and the chance of starting a rate cutting program in May stands at 58.6%. The stronger-than-expected January jobs data released on Friday further eliminates the chance of a rate cut in March. The U.S. economy added a whopping 353,000 new jobs in January while economists polled by The Wall Street Journal had forecast a 185,000 increase in new jobs. The past week has also been heavy with earnings reports, as several tech giants, including Microsoft, Apple, Meta, and Amazon, reported their financial results for the fourth quarter of 2023. Among the 220 S&P 500 companies that have reported their earnings so far, 68% have beaten estimates. What has been driving the tech stocks’ rally since last year was mostly the prospect of sales from artificial intelligence products, but tech companies are not able to monetize the trend yet. On Thursday, New York Community Bancorp Inc.’s stock triggered the steepest drop in regional-bank stocks since the collapse of Silicon Valley Bank in March 2023. New York Community Bancorp on Wednesday posted a surprise loss and signaled challenges in the commercial real estate sector with troubled loans. On March 11, the Fed’s bank term funding program, which was launched in March last year to bolster the capacity of the banking system, will expire. If the Fed could start cutting its key interest rate in March, it would be sort of like the ambulance that was going to pick regional banks up and save them, said one expert. However, some experts advise investors to go risk-off before May, while others remain optimistic about the future of risk assets.



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