S&P 500 ( $SPX) Set for Stellar Three-Day Rally in 2024: Market Overview
US stocks are continuing their rebound, marking a third consecutive session of gains. Amid expectations that the Federal Reserve may reduce interest rates this year and signs that geopolitical tensions are easing, the markets are experiencing their most substantial rally of 2024. The S&P 500 has surpassed its 50-day average price, a critical level for many analysts that underscores the current positive market sentiment.
The rally is supported by a robust earnings season that is boosting investor optimism, especially after a market pullback that has made some stocks particularly appealing. Although concerns about below-average trading volume suggest some caution about the rally’s sustainability, most sectors are recording gains. Leading the surge in large-cap stocks are Nvidia Corp ( $NVDA) and Tesla Inc.,( $TSLA) while Micron Technology Inc. ( $MU) benefits from an analyst upgrade. On the downside, Apple Inc. ( $AAPL) saw a decline after Warren Buffett announced a reduction in his stake, despite recently praising the company.
In the bond market, yields on 10-year Treasury notes have dropped by three basis points to 4.48%, with upcoming auctions for 10-year and 30-year securities totaling $67 billion set to test the demand for long-term debt. The market has responded to Federal Reserve Chair Jerome Powell’s recent remarks, which were less aggressive than expected, by cautiously increasing bets on a policy easing this year.
Regional Federal Reserve leaders have also shared insights into the economic outlook. Thomas Barkin from the Richmond Fed anticipates that high interest rates will further slow the economy and help bring inflation down to the target of 2%. Meanwhile, John Williams from the New York Fed mentioned that rate cuts are expected eventually, though the timing will depend on a comprehensive review of economic data.
From a corporate perspective, strong quarterly earnings are justifying the current high valuations in the stock market, with BlackRock Investment ($BKN) Institute’s strategists noting the robust financial performances. Looking ahead, companies like Arm Holdings Plc ( $ARM) and Palantir Technologies Inc. ( $PLTR) are anticipated to report benefits from ongoing high demand in artificial intelligence. Meanwhile, Airbnb Inc. ( $ABNB) might show a slowdown in the gig economy sector, whereas Uber Technologies Inc. ( $UBER) is likely to report growth as it expands its network of drivers and merchants.
In regulatory news, the US Securities and Exchange Commission has indicated a potential enforcement action against Robinhood Markets Inc. ( $HOOD) concerning its cryptocurrency operations. This move is part of a broader, sustained crackdown on digital assets.
On the mergers and acquisitions front, Synopsys Inc. ( $SNPS) is divesting its software integrity division to two private equity firms for up to $2.1 billion. Meanwhile, in the consumer sector, Tyson Foods Inc. ( $TSN) reports that ongoing inflation is impacting consumer demand for its higher-profit branded and ready-to-eat products.
In other corporate updates, United States Steel Corp. ( $X) has received a favorable analyst upgrade from Morgan Stanley ( $MS) due to potential significant investments, and Victoria’s Secret & Co. ( $VSCO) faces a downgrade over potential earnings concerns. Exxon Mobil Corp.’s ( $XOM) CEO discussed ongoing arbitration with Chevron Corp. ( $CVX) over key assets in Guyana, a process expected to extend into 2025. Lastly, Brookfield Asset Management ( $BAM) has entered into a strategic partnership with Castlelake LP, enhancing its credit business operations.
