Market Summary – April 8, 2024

Last Week’s Summary

  • S&P 500 Index fell 0.93%
  • International Equities fell 0.80%
  • Emerging Markets rose 0.28%
  • U.S. 10-Year Treasury Yield rose to 4.40%
  • Initial Jobless Claims rose to 221k
  • ISM Manufacturing rose to 50.3
  • ADP Employment Change rose to 184k
  • Nonfarm Payrolls rose to 303k
  • Unemployment Rate fell to 3.8%

What to Watch for This Week

  • M, 4/8/24 NY Fed 1-Yr Inflation Expectations
  • W, 4/10/24 MBA Mortgage Applications, CPI, CPI Core, FOMC Meeting Minutes
  • Th, 4/11/24 Initial Jobless Claims, PPI, PPI Core
  • F, 4/12/24 U. of Mich. Sentiment, U. of Mich. 1-Yr Inflation

Weekly Market Recap

The stock market closed out the week on a positive note, despite having its worst week since January, following an impressive jobs report that signaled continued strength in the U.S. economy, even amid the potential for sustained higher interest rates.

On Friday, all major sectors within the S&P 500 saw gains, propelling the Index up by over 1%. This triggered another wave of hawkish sentiment in the bond market, leading to a climb in Treasury Yields. March saw an impressive surge in U.S. payrolls, adding 303,000 jobs, surpassing all prior estimates.

The unemployment rate dipped to 3.8%, wages showed solid growth, and workforce participation increased, highlighting the robustness of the labor market as a key driver of the economy. Wall Street chose to adopt an optimistic outlook on Friday, reasoning that a strong economy would mitigate the need for the Federal Reserve to immediately adjust its policies.

Following the March employment report, traders backed off from fully pricing in a Fed rate cut before September. Swap contracts, which forecast the central bank’s rate decisions, lowered the probability of a rate cut in June to around 52%, and for July below 100%. Federal Reserve Chair Jerome Powell has emphasized that robust hiring alone may not delay policy easing.

However, Friday’s jobs report, combined with a rise in key inflation figures at the start of 2024, suggests the potential for later or fewer cuts this year. While the expected rate cuts in June and July may be in question, next week’s CPI release will serve as a crucial indicator for the Fed’s future moves.

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