The US stocks declined throughout the board on Tuesday, with investors feeling uncertain regarding the Federal Reserve rate cuts. Dow Jones Industrial Average saw a fall of ~232 points or ~0.6%, the S&P 500 declined ~0.4% while tech-heavy Nasdaq fell ~0.2%. The impact on the US stocks after the governor’s comments was much anticipated as investors were seeking clear signals and timing about the rate cuts.
With equity investors worrying, how did the bond markets perform?
Impact on the US Stocks after Governor’s Comments
In the bond investing community, the 10- year yield went up by ~0.115% to touch 4.064% on Tuesday. This was the largest gain since 8th December. Tuesday’s unfavourable market sentiments were due to Federal Reserve Gov.’s comments. The comments didn’t exhibit that the US Fed is in a rush for rate cuts.
But what comments did he make? And how those comments reduced the odds of the rate cuts?
Well, the governor mentioned that until and unless the officials get convinced that inflation is actually sustaining near their target of 2%, the US Fed will not start rate cuts. As a result of this, CME’s FedWatch tool exhibited that chances of rate cuts in March is now ~65%, which was down from ~77% in the previous week.
Dow Jones suffered the most in the trading session as a result of fall in shares of airplane marker Boeing. Wells Fargo analyst downgraded the company’s shares after 737 MAX 9, which is being operated by Alaska Air Group, made emergency landing. This landing was done because door plug blew out during the journey.
Commodities sector under political tensions
Coming to the commodities sector, the oil futures were little changed, with the market now digesting political tensions in Mid-east and attacks on the Red Sea shipping. The concerns regarding the soft global oil demand and solid non-OPEC production were the other critical factors which continue to keep the prices from rallying.
While impact on the US stocks after the governor’s comments affected investors’ sentiments, there was some optimism too in the market. Advanced Micro Devices shares ended higher, with the stock rising +8% as Susquehanna Financial increased price objective on the stock to $170 from $130. Walt Disney increased over 2% as NY Post reported that ESPN and National Football League have been in advanced discussions. NFL might take an equity stake in ESPN.
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