The week ended with positive signs and strong gains mainly for the Nasdaq, which recorded its best session since last November. But investors on Wall Street are no longer under any illusions about the prospect of the Fed starting a downward cycle in interest rates, something the board itself will likely be quick to point out at next week’s crucial meeting.
For the time being, however, the strong results in Big Tech provided a welcome, bullish break that the market definitely needed to shake off the… interest rate gloom.
Thus, the Dow Jones gained 0.40% to 38,239 points, the S&P 500 registered a significant increase of 1.02% to 5,099 points and the Nasdaq made an impressive jump of 2.03% to reach 15,927 points.
With the performance this week ended with gains, affecting the overall negative picture of April. The S&P 500 gained 2.8%, the Nasdaq more than 4% and the Dow just 0.8%. So, for S&P and Nasdaq it was the best week since last November.
“We’re ending a volatile week on a positive note,” Edward Jones’ Mona Mohajan told CNBC, adding that the rally was driven by surprising results from large-cap technology companies.
After all, the strong corporate performance managed to temporarily distract investors from the continuing flow of data confirming the resurgence of inflationary pressures, in a way that will force the Fed to delay cutting interest rates until perhaps the final quarter of the year.
In fact, to the first quarter inflation data announced on Thursday (price index and personal consumption expenditure index), March data for the PCE index, which is the Fed’s favorite inflation indicator, was added today. The personal consumption expenditure index rose further from 2.5% to 2.7%, slightly above the expected 2.6%, with structural PCE unchanged at 2.8%, instead of the 2.7% expected analysts expected.
The figures may not have been much worse than forecasts, relieving a market that has been bombarded with persistent negative data in recent months, but they clearly add to the overall picture of persistently high inflation that is not yet going to convince the board to proceed with interest rate cuts.
It’s something that investors now seem to have… digested, although surely what the board will say at next week’s FOMC meeting will help in that direction.
