Stock market today: Techs lead stocks higher as Powell reinforces Fed caution
Powell #Powell
US stocks opened higher on Wednesday, with techs vaulting back from a steep sell-off as investors digested Federal Reserve Chair Jerome Powell’s stance that interest rate cuts are still likely this year.
The tech-heavy Nasdaq Composite (^IXIC) jumped about 1% after techs led a sharp slide in stocks more broadly on Tuesday. The S&P 500 (^GSPC) added more than 0.6%, while the Dow Jones Industrial Average (^DJI) popped 0.5%, as both indexes came off losses of more than 1%.
Powell’s testimony to Congress later may provide a catalyst for stocks, which have logged two days of losses as a battering for “Magnificent Seven” stalwarts Apple (AAPL) and Tesla (TSLA) fueled bubble fears.
Investors will listen closely for any deviation by Powell from Fed policymakers’ much-repeated message that there’s no rush to cut interest rates. Prepared testimony published Wednesday morning revealed that Powell plans to tell lawmakers that rate cuts are likely to be warranted “at some point” in 2024. Investors will look for more clarity on this issue as Powell fields questions from lawmakers over the next two days.
“If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell will testify to the House Financial Services Committee.
In individual stocks, CrowdStrike (CRWD) shares continued their post-earnings rally, up over 17% after the cybersecurity company’s outlook signaled healthy demand in the sector. Other cybersecurity stocks rose in its wake, including gains for Zscaler (ZS).
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Job openings hit their lowest level since March 2021 in January, showing further signs of rebalancing in the labor market.
There were 8.86 million jobs open at the end of January, a slight decrease from the 8.89 million job openings in December, according to new data from the Bureau of Labor Statistics released Wednesday. Economists surveyed by Bloomberg had expected there were 8.85 million openings in January.
The report also showed that the quits rate, which reflects confidence among workers, slipped to 2.1%. That’s down from 2.2% in the previous month and is its lowest level since August 2020. Additionally, the JOLTS report showed that 5.7 million hires were made in the month, a slight decrease from the 5.8 million seen in December.
The hiring rate sat at 3.6% in January.
US stocks opened higher on Wednesday, with techs vaulting back from a steep sell-off as investors digested Federal Reserve Chair Jerome Powell’s stance that interest rate cuts are still likely this year.
The Nasdaq Composite (^IXIC) jumped about 1% after techs led a sharp slide in stocks more broadly on Tuesday. The S&P 500 (^GSPC) added more than 0.6%, while the Dow Jones Industrial Average (^DJI) popped 0.5%, as both indexes came off losses of more than 1%.
Prepared testimony published Wednesday morning revealed that Powell plans to tell lawmakers that rate cuts are likely to be warranted “at some point” in 2024. Investors will look for more clarity on this issue as Powell fields questions from lawmakers over the next two days.
“If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell will testify to the House Financial Services Committee.
Just to level set with you in case you haven’t gotten there already:
The year may end with no interest rate cuts as opposed to the six some on the Street expected in early January. It is interesting to see markets still rocking as expectations on rates have come in. Good to see investors embrace good economic data!
It’s likely you will hear the Fed’s Jerome Powell continue the drumbeat of recent Fedspeak on rates in his testimony to lawmakers today.
For Goldman Sachs economists, 2024 is now shaping up to be the year of rate cuts … everywhere else.
“The major DM [developed market] central banks will cut for at least three consecutive meetings starting in June, continue to cut consecutively in economies like the Euro Area and UK where growth remains below trend, but slow down in economies like the US where activity remains resilient,” said Goldman’s chief economist Jan Hatzius.
And that raises the question: is it time to rotate into European stocks from more expensive US equities?
Goldman sees a faster pace of rate cuts in markets outside the US. (Goldman Sachs)