4:15pm: Equities begin Q2 with varied performance
US stocks closed out the second quarter of 2024 with a mixed performance.
The S&P 500 and Dow Jones fell 0.2% and 0.6% respectively, at 5,244 and 39,567 points. The Nasdaq, however, rebounded slightly in afternoon trading to close 0.1% above is opening level at 16,397 points.
Bond sell-offs led to rising Treasury yields, with the 10-year Treasury yield nearing its highest level of the year. Despite this, the US manufacturing sector showed strength, signaling economic acceleration and raising questions about the Federal Reserve's interest rate strategy.
Equities had a strong start to the year, setting numerous closing records, but attention now turns to the upcoming jobs report as a key indicator for the Fed.
Gold hit a new record high price on Monday as softer US inflation data continued to support expectations that the Federal Reserve will begin cutting interest rates this quarter.
The yellow metal notched a new record high price of $2,265 per ounce before paring its gains to trade up about 1% at $2,260 per ounce mid-afternoon.
The gold price has gained more than 9% in the year to date.
12:15pm: Wall Street rally pauses
Markets dipped slightly just before noon on Monday despite optimism for rate cuts amidst positive economic indicators.
At around 12:15pm ET, all three major indices were in the red. The Dow Jones was down nearly 0.7% at 39,593, the S&P had taken a 0.3% hit at 5,237 and the Nasdaq paused its earlier rally to sit at around 16,365 points.
Despite this, Wall Street has had a strong start to 2024, with the S&P 500 setting multiple records. Data from the Personal Consumption Expenditures price index has raised hopes of rate cuts, with investors increasingly betting on a June cut, and the upcoming jobs report will provide further insight for the Fed.
Additionally, reports show the US manufacturing sector is in its strongest position since 2022, which could bode well for stocks and the broader economy.
Elsewhere, gold reached new highs, surpassing $2,265 per ounce, driven by expectations of interest rate cuts amid economic indicators aligning with investors' anticipation, leading to a 6% increase year-to-date.
9:50am: Stocks mixed at the open
US stocks started the second quarter mixed as softening in the Federal Reserve’s preferred inflation gauge, the PCE, spurred rate cut hopes.
The tech-laden Nasdaq moved higher while the Dow Jones slipped into the red shortly after US markets opened on Monday.
The Nasdaq gained 0.6% at 16,476 points and the S&P 500 traded a modest 0.1% higher at 5,263 points.
The Dow Jones, nearing a record 40,000 points, was down 0.2% at 39,733 points.
Gold, meanwhile, added 1.6% just shy of $2,275 an ounce – a fresh record.
Forex.com head of market research Matt Weller said gold was in “rally mode,” noting that expectations of a Fed rate cut this quarter was supporting the yellow metal.
“Gold prices tend to move inversely with interest rates,” Weller said. “When interest rates fall, gold becomes relatively more attractive compared with fixed income assets such as bonds, which offer weaker returns in a lower interest rate environment.”
8:22am: Second quarter kicks off
US stock futures edged higher before Monday’s opening bell, the first day of the second quarter.
The Nasdaq was up 0.4% at 18,540 points while the Dow Jones was up 0.3% at 40,277 points in pre-market trade.
The S&P 500 was up 0.3% at 5,323 points, after finishing the first quarter with a 10% gain.
Jay Woods, chief global strategist at Freedom Capital Markets, highlighted that represented back-to-back quarterly gains for the index for just the 8th time since 1950.
He added that the big winner for last week was the Russell 2000.
“The small caps jumped by over 2.5% as they try to join the 2024 bull party finishing the quarter with a 4.8% gain,” Woods said.
Attention this week is on US jobs data due Friday, preceded by job openings and wage data and updates on the services and manufacturing sectors.
“Hopefully for the Fed, the data won’t be too strong to spoil the Fed cut expectations,” commented Swissquote Bank senior analyst Ipek Ozkardeskaya.
The US on Good Friday posted its latest core Personal Consumption Expenditures (PCE) data. The headline figure came in line with the expectations at 2.8%, down from 2.9% in the previous month. The monthly figure was 0.3% as expected, but the prior month's read was revised up to 0.5%.
"The bad news – for inflation – is that personal spending jumped more than expected in February, but the good news is – for inflation – personal income fell more rapidly than expectations," Ozkardeskaya noted.
"[Fed chairman Jerome] Powell said that ‘the fact that the US economy is growing at such a solid pace, the fact that the labour market is still very, very strong, gives them the chance to just be a little more confident about inflation coming down before they take important steps.’"
Meanwhile, Walt Disney Co (NYSE:DIS, ETR:WDP)'s proxy battle with Nelson Peltz will come to a head on Wednesday if the two parties cannot reach a deal by the company’s shareholder vote.