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Wall Street closed sharply lower on Tuesday intensifying the profit booking on U.S. stocks of the previous day. Market participants remained concerned about the time of Fed’s first interest rate cut following recently released several strong key economic data. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1% or 396.61 points to close at 39,170.24. Notably, 23 components of the 30-stock index ended in negative territory and 7 ended in positive zone. The blue-chip index was down more than 500 points at its intraday low.
The major loser of the Dow was UnitedHealth Group Inc. (UNH - Free Report) , The stock price of the lead HMO plummeted 6.4% after the U.S. government kept reimbursement rates for providers of Medicare Advantage health plans unchanged. UnitedHealth currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 16,240.45, sliding 1% or 156.38 points due to weak performance by technology bigwigs. The S&P 500 fell 0.7% to finish at 5,205.81. Nine out of 11 broad sectors of the broad-market index ended in negative territory, while two in positive zone.
The Real Estate Select Sector SPDR (XLRE), the Health Care Select Sector SPDR (XLV) and the Consumer Discretionary Select Sector SPDR (XLY) fell 1.1%, 1.6% and 1.5%, respectively. On the other hand, the Energy Select Sector SPDR (XLE) gained 1.4%.
The fear-gauge CBOE Volatility Index (VIX) was up 7% to 14.61. A total of 11.12 billion shares were traded on Tuesday, lower than the last 20-session average of 11.87 billion. Decliners outnumbered advancers on the NYSE by a 2.86-to-1 ratio. On Nasdaq, a 2.63-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. Recently, 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.
On Apr 1, Regional Fed Presidents Mary Daly of San Francisco and Loretta Mester of Cleveland both said they anticipate rate cuts this year. However, they do not expect monetary easing policies to be implemented anytime soon.
Notably, the Fed’s June FOMC “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.
Following these developments, yield on the benchmark 10-Year U.S. Treasury Note briefly touched 4.4%, at its intraday high, marking the highest level since Nov 28. The CME FedWatch tool currently shows 63.6% chance of 25 basis points rate cut in June. This probability was more than 70% a week ago. On Apr 1, the Atlanta Fed forecast 2.8% GDP growth in first-quarter 2024, compared with 2.9% projected on Mar 29.
Economic Data
New orders for manufactured goods increased 1.4% in February, beating consensus estimate of 0.9%. The metric for January was revised downward to a drop of 3.8% from a drop of 3.6% reported earlier. Shipments also increased 1.4% in February. Orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose by an unrevised 0.7% in February.
The Job Openings and Labor Turnover Survey (JOLTS) of the Labor Department showed there were 1.36 vacancies for every unemployed person in February, down from 1.43 in January. Job openings, a measure of labor demand, increased by 8,000 to 8.756 million on the last day of February. The metric for January was revised lower to 8.748 million from 8.863 million reported earlier.
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Stock Market News for Apr 3, 2024
Wall Street closed sharply lower on Tuesday intensifying the profit booking on U.S. stocks of the previous day. Market participants remained concerned about the time of Fed’s first interest rate cut following recently released several strong key economic data. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1% or 396.61 points to close at 39,170.24. Notably, 23 components of the 30-stock index ended in negative territory and 7 ended in positive zone. The blue-chip index was down more than 500 points at its intraday low.
The major loser of the Dow was UnitedHealth Group Inc. (UNH - Free Report) , The stock price of the lead HMO plummeted 6.4% after the U.S. government kept reimbursement rates for providers of Medicare Advantage health plans unchanged. UnitedHealth currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 16,240.45, sliding 1% or 156.38 points due to weak performance by technology bigwigs. The S&P 500 fell 0.7% to finish at 5,205.81. Nine out of 11 broad sectors of the broad-market index ended in negative territory, while two in positive zone.
The Real Estate Select Sector SPDR (XLRE), the Health Care Select Sector SPDR (XLV) and the Consumer Discretionary Select Sector SPDR (XLY) fell 1.1%, 1.6% and 1.5%, respectively. On the other hand, the Energy Select Sector SPDR (XLE) gained 1.4%.
The fear-gauge CBOE Volatility Index (VIX) was up 7% to 14.61. A total of 11.12 billion shares were traded on Tuesday, lower than the last 20-session average of 11.87 billion. Decliners outnumbered advancers on the NYSE by a 2.86-to-1 ratio. On Nasdaq, a 2.63-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. Recently, 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.
On Apr 1, Regional Fed Presidents Mary Daly of San Francisco and Loretta Mester of Cleveland both said they anticipate rate cuts this year. However, they do not expect monetary easing policies to be implemented anytime soon.
Notably, the Fed’s June FOMC “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.
Following these developments, yield on the benchmark 10-Year U.S. Treasury Note briefly touched 4.4%, at its intraday high, marking the highest level since Nov 28. The CME FedWatch tool currently shows 63.6% chance of 25 basis points rate cut in June. This probability was more than 70% a week ago. On Apr 1, the Atlanta Fed forecast 2.8% GDP growth in first-quarter 2024, compared with 2.9% projected on Mar 29.
Economic Data
New orders for manufactured goods increased 1.4% in February, beating consensus estimate of 0.9%. The metric for January was revised downward to a drop of 3.8% from a drop of 3.6% reported earlier. Shipments also increased 1.4% in February. Orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose by an unrevised 0.7% in February.
The Job Openings and Labor Turnover Survey (JOLTS) of the Labor Department showed there were 1.36 vacancies for every unemployed person in February, down from 1.43 in January. Job openings, a measure of labor demand, increased by 8,000 to 8.756 million on the last day of February. The metric for January was revised lower to 8.748 million from 8.863 million reported earlier.