Wall Street Today | Why stocks are rallying in the midst of a war and soaring inflation?
Stocks set for steady open; Euro up on French vote
Stocks look set for a steady start Monday as investors weigh the implications of elevated inflation, while the euro gained on Emmanuel Macron's lead in the first round of the French presidential election.
Futures pointed to muted opens in Japan, Australia and Hong Kong, while those for the U.S. edged up. Global shares slid last week after the Federal Reserve signaled sharp interest-rate hikes and balance-sheet reduction to tackle price pressures. Crude oil was little changed in early trading.
U.S. inflation may peak in March, but it's a slow go to Fed's 2%
March may prove to be the high-water mark for U.S. inflation, but price pressures will likely remain both elevated and persistent against a backdrop of firmer services demand and geopolitical risks. (Consumer prices seen rising at an annual rate of 8.4% in March)
With annual inflation running well above the Federal Reserve's goal of 2%, officials have pivoted hard on policy. They're expected to raise interest rates by a half point in May and begin reducing assets on the central bank's balance sheet.
Economists expect inflation to settle back to an average 5.7% in the fourth quarter. Even so, that's about three times the annual rate seen in the years before the pandemic.
Why stocks are rallying in the midst of a war and soaring inflation
Investors are confronting one of the most uncertain periods of their lifetimes. Stocks are rallying anyway.
The S&P 500 has rebounded 7.6% from its 2022 low on March 8, cutting its losses for the year to about 6%—roughly half of what they were weeks ago. In many ways, investors say, the rebound has been as broad as it has been impressive, lifting everything from travel stocks to utilities to unprofitable technology companies.
Recession risk is rising, economists say
Economists see a growing risk of recession as the relentlessly strong U.S. economy whips up inflation, likely bringing a heavy-handed response from the Federal Reserve.
Economists surveyed by The Wall Street Journal this month on average put the probability of the economy being in recession sometime in the next 12 months at 28%, up from 18% in January and just 13% a year ago.
Bank deposits could drop for first time since World War II
U.S. banks have a streak of increasing deposits as a group every year since at least World War II. This year could break it.
Over the past two months, bank analysts have slashed their expectations for deposit levels at the biggest banks. The 24 institutions that make up the benchmark KBW Nasdaq Bank Index are now expected to see a 6% decline in deposits this year. Those 24 banks account for nearly 60% of what was $19 trillion in deposits in December, according to the Federal Deposit Insurance Corp.
Bank ETF posts biggest cash exodus since 2020 ahead of earnings
Exchange-traded fund investors are bailing on bank stocks in a big way just before the earnings season kicks off.
More than $2.5 billion has exited the $42 billion $Financial Select Sector SPDR Fund (XLF.US)$ this week, putting the ETF on track for the largest one-week outflow since June 2020, according to data compiled by Bloomberg. Prior to Friday's 1.2% gain, XLF had dropped for seven straight days.
Inverted US yield curve is not always gloomy for stocks
The US government bond market is signalling concerns about an impending recession, but past experience suggests the trend is not always a reliable omen for the country's stock market.
Still, that may not translate into a stock market fall. The S&P 500 index of US stocks has returned a median of 9 per cent in the 12 months following previous yield curve inversions and 16 per cent over two years, according to Goldman Sachs.
Wall Street banks weigh bond sales in race to beat rising rates
April tends to be the second-highest month for debt sales from the biggest banks, JPMorgan Chase & Co. analysts Kabir Caprihan and Nikita Dyatlov wrote in a client note this week.
While sales are expected to be brisk, it may be more so than usual, according to the strategists. Rates are probably only going to march higher from here, and borrowers are looking to issue while the cost of funding remains relatively low.
Next big bet in emerging markets hangs on when rate cycles peak
Traders of emerging-market debt have a new challenge: Predicting which central banks will be first to halt rate hikes, and then buying bonds from those countries.
Source: Bloomberg, WSJ, FT
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
Read more
Comment
Sign in to post a comment
Moomoo News Official Account
In 10 minutes it’s history. At four I’m a dinosaur!
39KFollowers
26Following
46KVisitors
Follow
DukeSteven : Bull nut! US stocks are laughing stock, drop non stop even before war
Ben 23 : Fed behind the curve. Always the case.
Amanda Nibert Ben 23 : thnx
atikalper0018 :
moneyworkhard : Uncertainties still there, volatility also.
Hit and run with 25% gain may be a good strategy now
搞经济 抄底 加仓 : Guess there will be another around of Money printing coming. That's the only way to safe itself ^ let's do it. Activate the money machine ^
helloarigato moneyworkhard : Agree