After Federal Reserve Chair Jerome Powell maintained in a television interview over the weekend that the central bank will take its time cutting interest rates, U.S. markets fell on Monday.
After big-tech earnings propelled a stock-market boom this week, investors considered Dow components Caterpillar Inc. CAT and McDonald's Corp. MCD. The Dow closed Friday at its ninth record high of 2024, while Meta Platforms Inc. META and Amazon.com Inc. AMZN helped the S&P 500 to its eighth record closing of the year.
After the Institute for Supply Management reported a 53.5% services index in January, up from a seven-month low of 50.5% in December, stocks fell Monday. Wall Street Journal economists anticipated 52.0% ISM.
Analysts anticipate the Federal Reserve to delay rate reduction due to solid data. “The Fed is watching for signs of economic weakness, which could lead to earlier rate cuts. But the current data demonstrates the opposite,” Comerica Bank chief economist Bill Adams said in a call.
following Powell said following the Fed's policy meeting on Wednesday that beginning rate cuts in March was improbable, expectations fell.
Powell reiterated on “60 Minutes” over the weekend that the central bank would not lower rates in March. In a phone interview, Main Street Research founder and chief investment officer James Demmert said, “I think investors were a little over their skis in anticipating the Fed cutting a lot.”
After a big surge, equities should “take a breather” this week, but Demmert advised investors to exploit pullbacks to diversify. He noted that investors should focus less on the Fed and more on excellent profits, which have driven the surge. U.S. payrolls data on Friday showed an unexpected 353,000 jobs gained in January, delaying rate decreases.
Adams of Comerica Bank said robust economic growth is excellent news. He said that he would be concerned if the market expects the Fed to maintain its policy rate higher longer, but not if the Fed aims to gently decrease its key interest rate owing to positive economic indicators.
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