Fed rate decision, May inflation next week will be key tests for stocks | Wilnesh News
The Fed’s next interest rate decision on Wednesday, along with May inflation data, will play a key role in stock market performance next week – likely to bring more volatility to already nervous markets. The stock market seemed poised to end its first week of June gains on a positive note, with Nvidia pushing the market to new highs, briefly surpassing $3 trillion in market capitalization, and temporarily replacing Apple as the second most valuable company after Microsoft. Meanwhile, GameStop shares rose before falling back in a sustained period of wild volatility. Investors continued to look for signs of a cooling labor market, hoping that a slowing economy might encourage the Federal Reserve to cut interest rates, but May’s non-farm payrolls report was hotter than expected, dashing hopes of recent easing. Friday’s nonfarm payrolls report showed the U.S. economy added 272,000 jobs in May, exceeding economists’ consensus forecast of 190,000 jobs, according to a Dow Jones survey. The number of new jobs added in May was also much higher than the 175,000 in April. The unemployment rate rose to 4% for the first time since 2022 as more workers entered the labor force. The outcome could complicate Wednesday’s Fed policy meeting and, more importantly, further delay the timetable for rate cuts. Kathryn Kaminski, chief research strategist and portfolio manager, said, “Today’s data raises questions about whether we get data that happens to be in line with expectations (no clear path) or surprises, and we might start from… Another cautious statement from the central bank governor” AlphaSimplex Group Manager. Fed Rate Decision All eyes will be on next week’s Federal Reserve meeting and its rate decision scheduled to be announced at 2pm on Wednesday. Members of the Federal Open Market Committee are under pressure after the European Central Bank cut interest rates this week for the first time since 2019 despite persistent inflationary pressures in the European Union. More important than next week’s rate decision itself is the Fed’s latest forecast for interest rates and the timing of a rate cut. That could drive markets in the week ahead, said Scott Train, senior global market strategist at Wells Fargo Investment Institute. In March, the last time the Fed released its known updated forecasts, policymakers called for at least three rate cuts in 2024. “I’d like to see the Fed say nothing to indicate that they’ve closed the door on a rate cut in July and that a rate cut is still possible,” said Tony Roth, chief investment officer at Wilmington Trust Co. , the market will get two more data on the personal consumption expenditures price index (the Fed’s preferred inflation indicator) before the July meeting. Federal funds futures trading is currently pricing in a 54% chance of a rate cut in September and a near 90% chance of easing in December, according to CME Group’s FedWatch tool. Envestnet’s Dana D’Auria said any sign that an early rate cut next week, such as in September, would send a dovish signal to the market. D’Auria, the company’s co-chief executive, said investors hope to hear comments from the Federal Reserve next week, indicating that the Fed is willing to start cutting interest rates in September, and that inflation has proven not difficult to solve, forcing the easing policy to be postponed to the end of 2024. Investment Officer. The sticky inflation data in the May CPI report triggered months of worries that the Federal Reserve would keep the federal funds rate at the current 5.25% to 5.50%, waiting for more evidence that inflation is coming, and any The arrival of easing policy will be much later than previously expected. That makes the May consumer price index report released before the bell on Wednesday another key focus for investors. Economists surveyed by Dow Jones expect the consumer price index to increase 3.4% annually and 0.1% quarterly. Core CPI excluding food and energy is also expected to increase by 3.4% annually, but by 0.3% quarterly. “The Fed said it needs to be convinced that both inflation and labor market data are cooling,” Wells Fargo’s Wren said in a note to clients. “That means the inflation data will continue to fall for a month or two. The problem is that the latest data only shows Apple Developer Conference Iinvestor’s attention will also be closely focused on Apple’s Worldwide Developers Conference in Cupertino, California on Monday, where the iPhone maker is widely expected to announce its plans. Latest software updates. Apple’s push to unveil its artificial intelligence agenda is growing as investors continue to favor companies with clear plans. Apple’s strategy for monetizing artificial intelligence has been shrouded in mystery compared with rivals, fueling concerns among some investors that the company is lagging behind. “This event will have broad and important implications for the technology industry,” said John Belton of Gabelli Funds. The portfolio manager expects Apple to announce new artificial intelligence for its iPhone models Integrate and possibly test some new features built into apps like Notes and Safari. He added that Apple may also hint at plans to develop its own data center chips. One-Week Ahead Calendar Monday, June 10, 1 p.m.: 3-Year Bond Auction Tuesday, June 11, 6 a.m.: NFIB Small Business Index (May) 1 p.m.: 10-Year Bond Auction Proceeds: Casey’s General Stores 6 Wednesday, June 12, 7 a.m.: Weekly Mortgage Applications (week ending June 7) 8:30 a.m.: Consumer Price Index (May) 2 p.m.: FOMC Policy Announcement 2:30: Fed Chairman Jerome Powell holds press conference Earnings: Broadcom, Dave & Buster Thursday, June 13 8:30 AM: Weekly jobless claims (week ending June 8) 8:30 AM: Producer Price Index (May) 1 p.m.: 30-Year Treasury Auction Proceeds: Adobe, Signet Jewelers, John Wiley Friday, June 14, 8:30 a.m.: Import and Export Prices (May) 10 a.m.: University of Michigan Consumer Confidence Index (Preliminary June)
