All eyes on Fed rate outlook, Nvidia meeting | Wilnesh News
How the Fed plans to continue raising interest rates will be in focus next week after some recent signs of rising inflation muddied the outlook. The Fed is expected to keep interest rates unchanged at the end of its policy-setting meeting on Wednesday, but investors will be more focused on updates to the central bank’s dot plot or forward-looking forecasts from individual committee members. In December, policymakers expected at least three and a quarter percentage points of interest rate cuts in 2024. For investors, the risk of the dot plot is a bit hawkish. While most expect the Fed to maintain its forecast of three interest rate cuts this year, some are concerned that a slew of hot inflation data this week suggests the Fed will have a way to achieve its 2% target and that it expects fewer rate cuts. . The results could throw cold water on the recent stock market rally. “If we don’t see any meaningful change in these forecasts, investors may view that as positive as that would keep expectations of three to four rate cuts this year in place,” said Sid Vaidya, U.S. wealth investment strategist at TD Wealth. . On the other hand, if the fed funds rate is forecast to go higher, which means fewer rate cuts, this will be seen as negative for the market and will certainly lead to volatility in the fixed income market, but it will also lead to market volatility. May cause stock market volatility. ” For example, even as the S&P 500 set a new closing record for the week, stocks still posted a weekly loss on Friday. Nvidia, on the other hand, will come under greater scrutiny next week as Chief Executive Jensen Huang attends the company’s annual artificial intelligence conference. Notably, the March meeting may also be the first indication that the Fed has begun discussing tapering its quantitative tightening operations, meaning it will work to phase out its efforts to inject trillions of dollars into the economy, an effort that has begun in During the Covid-19 pandemic. Key Fed spokespeople including Dallas Fed President Lori Logan have said they will implement tapering monetary policy before reducing the central bank’s liquidity. Molly McGown, U.S. rates strategist at TD Securities, said she expects preliminary plans to be announced at the March meeting, due in May. “We expect QT to decrease by 50% by August and then cease,” McGown said. “This will help reduce future Treasury bond issuance, thereby reducing future depreciation pressure on Treasury bonds, and we think the market will respond to this plan.” In addition, Brian Nick of the Macro Institute said that he expects specific details to be announced in 5 Announced in June, the plan will be promulgated starting in June. Growth slows Some market watchers expect that whatever signal the central bank sends next week, the Fed will cut interest rates more than it or the market currently expects. These observers pointed out that weak economic data and pressure from the Federal Reserve to implement large-scale tightening actions will lead to slower economic growth regardless of whether the central bank achieves a soft landing. TD Wealth’s Vaidya expects four rate cuts in the third and fourth quarters, but said the outlook will still depend on the data. TD Securities’ McGowan expects the Fed to ultimately cut rates five times, even though they only indicated three in the dot plot. Meanwhile, the Macro Research Institute’s Nick expects a rate cut of “twice or more” and he expects “the economic slowdown will be much deeper by the end of the year than the Fed anticipates.” Nick predicts a “severe recession,” with stocks falling 20% to 35% and not hitting bottom until next year. He advised investors to maintain a defensive stance. Nvidia is also hosting Nvidia’s GTC conference next week, dubbed “AI Woodstock” by Bank of America, where the AI chip maker is expected to announce its next-generation B100 graphics processing unit, which is expected to be on its flagship H100 chip Be innovative. The artificial intelligence giant will once again try to defend its market leadership as more investors worry about when the rally may run out of steam. Nvidia’s stock price has soared more than 70% this year. But Wall Street has only become more optimistic about the stock in recent weeks in anticipation of the meeting. Bank of America recently raised its price target on the stock to $1,100, saying in a note: “Valuation, ownership levels still suggest room for upside.” One-week ahead calendar all times are ET. Monday, March 18, 2024 NAHB Housing Market Index Tuesday, March 19, 2024 8:30 AM Building Permits SAAR (Preliminary) 8:30 AM New Housing Starts Wednesday, March 20, 2024 2 PM FOMC Meeting 2 PM Fed Funds Target Cap Bound Earnings: Micron Technology, General Mills Thursday, March 21, 2024 8:30 AM Current Accounts 8:30 AM Continuing Claims 8:30 AM Initial Jobless Claims 8:30 AM Philadelphia Federal Reserve Bank Index 9:45 AM PMI Composite Index SA Preliminary 9:45 AM Markit PMI Manufacturing SA Preliminary 9:45 AM Markit PMI Services SA (Preliminary) 10 AM Existing Home Sales SAAR 10 AM Leading Indicators SA M /M Profits: Nike, FedEx, Darden Restaurants No notable events on Friday, March 22, 2024 — CNBC’s Samantha Subin contributed to this report.
