Investors in New York found relief on Thursday as US stocks made a modest recovery following a tumultuous sell-off. This market recalibration came as traders adjusted their expectations for Federal Reserve rate cuts and awaited earnings reports from major tech companies.
The S&P 500 rose 0.8% while the Dow Jones Industrial Average gained 0.6%. The tech-heavy Nasdaq Composite, which suffered a more than 2% decline the day before, was trading up almost 1%.
Federal Reserve Chair Jerome Powell’s comments regarding interest rate cuts at the Fed’s next meeting in March prompted new predictions from investors. The CME FedWatch tool showed that there was about a two-thirds chance of another hold at the March meeting, with expectations of a small or larger cut in May.
Amidst this financial frenzy, the focus shifted to the upcoming earnings reports from the “Magnificent Seven” – Apple, Amazon, and Meta. These reports were highly anticipated after Microsoft and Alphabet’s results on Tuesday failed to meet investors’ lofty expectations.
Additionally, significant economic data, including January’s job market snapshot, is set to be released with Friday’s nonfarm payrolls report. This will provide further insight into the health of the labor market and its potential impact on the broader economy.
With the expected report on first-quarter economic growth from the Atlanta Fed projecting a 4.2% increase, positive developments in the US economy are vying for attention. High growth projections, coupled with expectations of additional interest rate cuts, indicate a dynamic and evolving market landscape.
The housing market also showed promise with a decline in mortgage rates, potentially stimulating a rebound in the housing sector. Data from Freddie Mac revealed a drop in the average rate for a 30-year loan, prompting expectations of increased activity in the housing market.
Tech giants like Amazon and Meta gained momentum ahead of their earnings releases, leading a rebound in the technology sector following the previous day’s sell-off. These developments indicate a potential shift in investor sentiment as they await the results of these major tech companies.
Overall, the financial world is navigating through a period of uncertainty, with market participants adjusting to new developments, economic data, and corporate earnings reports. The outcomes of these events will provide critical insights into the direction of the markets and the broader economy, shaping investor perceptions in the coming days.