New York, NY - Wall Street witnessed a pullback for the second consecutive day, with investors cautiously reassessing their positions after a euphoric rally fueled by hopes of lower interest rates. Despite the dip, major indexes remain comfortably in positive territory for the year, surpassing many analysts' full-year forecasts.
"The next couple of days will likely see investors grappling with a key question," stated Steve Chiavarone, head of the multi-asset group at Federated Hermes. "Should we double down on our optimism or trim some gains?" Federated Hermes had previously projected the S&P 500 to reach 5,200 points this year, a target surpassed last week. However, Chiavarone acknowledges the difficulty of selling with the Federal Reserve hinting at rate cuts and a robust economy.
A narrow majority of Federal Reserve officials recently reaffirmed plans to cut interest rates three times in 2024. This comes despite inflation proving stubbornly persistent in recent months. Fed Governor Lisa Cook, a voting member of the policymaking Federal Open Market Committee, reiterated this stance during a recent lecture at Harvard University, emphasizing a more balanced outlook for achieving employment and inflation goals.
Treasury yields, after a four-day decline, ticked upwards. The benchmark 10-year note yield closed at 4.252%, exceeding Friday's 4.217%. John Bailer, deputy head of equity income at Newton Investment Management, detects a positive shift – sectors beyond big tech are joining the market rally. He recently added energy and financial stocks to his portfolio, highlighting the upcoming corporate earnings reports as a more decisive factor than central bank actions.
The current earnings season nears its conclusion, with marquee names like McCormick and GameStop scheduled to report on Tuesday. Wednesday welcomes results from Carnival and Paychex, while Walgreens Boots Alliance caps off the week with its Thursday report. Equity and bond markets will be closed on Friday for Good Friday observances.
Super Micro Computer remains the undisputed high-flyer of the S&P 500, surging 7.2% today and boasting a staggering 267% year-to-date gain. Micron Technology also extended its winning streak, climbing 6.3% to a record high on robust demand for memory chips in the data storage market. However, the video game industry witnessed a stumble as Take-Two Interactive Software shed 4.1% following reports of a potential delay in the next installment of its popular "Grand Theft Auto" series.
United Airlines encountered headwinds, dropping 3.4% after the Federal Aviation Administration announced increased oversight in the wake of recent safety issues. The Wall Street Journal reported that this could translate to restrictions on new routes and aircraft utilization.
The cocoa market continued its unprecedented surge, with prices leaping 7.9% to a record-breaking $9,649 per metric ton. This resulted in a one-day gain of $710, the largest ever recorded. Ironically, this bullish trend for the key chocolate ingredient translated into losses for Hershey and Mondelez International, with their stocks declining 2.9% and 2.1%, respectively.
Internationally, the Stoxx Europe 600 inched up marginally to a new high. Germany's DAX also achieved a record high with a 0.3% gain, while London's FTSE fell slightly by 0.2%. At midday Tuesday, Asian markets displayed a mixed picture: Japan's Nikkei 225 hovered near flat, while Hong Kong's Hang Seng and South Korea's Kospi gained 0.7% and 1.3%, respectively. As of this writing, S&P 500 futures point towards a slightly positive opening bell in the US on Tuesday.
