US stocks looked set to kick off 2024’s second quarter on a high note Monday as investors looked to softening in the Federal Reserve’s preferred inflation gauge as a sign of a coming interest rate cut this quarter.
Futures tied to the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) rose around 0.3%. The blue-chip Dow Jones was eyeing the key 40,000 mark. Those tied to the tech-heavy Nasdaq Composite (^IXIC) led the gains, rising about 0.4%.
Wall Street has begun 2024 on a high note: The benchmark S&P 500 has set 22 fresh closing records so far this year as part of its best first quarter since 2019. Meanwhile, all three major averages have now risen for five straight months.
Markets were closed Friday, but the week’s data highlight — the Personal Consumption Expenditures price index — served to boost hopes of rate cuts this year. That index contains “core” PCE, the Fed’s preferred inflation gauge. The report showed core PCE rose 0.3% month over month, below economist expectations. Fed Chair Jerome Powell said Friday that the data was “along the lines” of what the Fed is looking for.
The data has given a boost to investor bets on a June rate cut. According to the CME FedWatch tool, around two-thirds of investors are pricing in a cut at the Fed’s June meeting, compared with about 55% last Thursday.
The highlight of Q2’s first week on the macroeconomic front is Friday’s jobs report, which will serve as another important signal to the Fed.
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Beware of the semiconductor stocks in April?
A good chart on the semis from BTIG’s technical analyst Jonathan Krinsky below. It shows how quickly the Philadelphia Semiconductor Index (SOX) has advanced in a relatively short period (compared to prior five month periods).
Can the gains continue? The semi bulls may have to contend with April seasonal vibes.
Krinsky notes that the SOX has been negative eight of the last ten Aprils.
The SOX has gone wild in recent months. (BTIG) -
Why Alphabet’s stock is under-performing
You maybe didn’t realize this given the meteoric moves in AI stocks and the hype around the technology, but Alphabet’s (GOOGL) stock isn’t really participating. Shares of Alphabet are up 8% year to date, lagging the Nasdaq Composite’s 9% gain and S&P 500’s 10.16% advance.
Jefferies analyst Brent Thill is out with a few reasons this morning for why the stock is sucking wind.
Out of all of them, I am most intrigued by the call out on management concerns. CEO Sundar Pichai has had a challenging 12-months on the AI front – from falling behind Microsoft (MSFT) on AI to not quieting concern on AI bias. Is he in the hot seat with investors? I wouldn’t go that far yet, but it warrants watching.
Those Jefferies mentions:
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