[ad_1]
A version of this article first appeared in CNN Business’ Before the Bell newsletter.Not a subscriber? You can sign up here it is. You can listen to the audio version of the newsletter by clicking on the same link.
new york
CNN
—
Decrease in ranking Reinforcements have finally arrived for the Magnificent Seven.
The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite Index hit record highs on Wednesday and Thursday after the Federal Reserve reiterated its outlook for a three-quarter point interest rate cut in 2024. . Investors had been concerned that the central bank would revise it to a lower-than-expected level. The three rate cuts followed strong inflation data in recent months.
But more stocks than just Big Tech are paving the way for the rally. The S&P 600 index, which tracks small-cap stocks in the United States, has just turned positive since the beginning of the year. This is good news for Wall Street because small businesses derive most of their revenue from U.S. customers and are the bellwethers of the U.S. economy. Small-cap stocks are often active in sectors such as financials and industrials, which tend to rise or fall with broader economic activity.
“When you see small-cap industrial stocks leading, it’s usually a sign that the market is saying things are pretty solid here,” said Ryan Detrick, chief market strategist at Carson Group. ” he said.
Their participation also shows that the market’s rapid growth extends beyond the tech giants. This is a welcome sign for investors, as a broader rally will produce a healthier rally. When market profits are not dependent on just a handful of stocks, you are less vulnerable to market declines.
The rally had already begun to widen in recent weeks ahead of the Fed-induced euphoria. Some investors say that’s because improving corporate profits and strong economic data have renewed hopes for a soft landing, a scenario in which the Fed lowers inflation to its 2% target without triggering a recession. He points out that this is because they are there.
About 93% of S&P 500 companies reported fourth-quarter results, and 78% beat profit estimates, according to data from Ned Davis Research through March 19.
According to FactSet data through March 7, 47 S&P 500 companies mentioned “recession” in their fourth-quarter earnings calls, the lowest number since 2021. Ta. In contrast, 37 companies had the most “soft landings” in their financial results announcements. He said the term goes back at least three years.
Meanwhile, employment data in recent months has shown that the labor market remains resilient as interest rates remain at 23-year highs.
So while Tesla and Apple’s stock prices continue to soar after strong gains last year, even as Tesla and Apple’s stock prices decline, Alphabet’s Magnificent Seven peers NVIDIA, Microsoft, and Amazon. , lagging behind the double-digit percentage increases recorded by Meta.
Still, Detrick says a 5% to 7% decline is nothing to worry about. [the rally is] “It’s almost too easy,” he said.
Some investors say Wall Street may be getting too ahead of itself in expecting such a rosy economic outcome.
“It’s going to be important for investors to figure out which expectations are realistic and which ones are a little bit too optimistic,” said Jeffrey Schultz, head of economic and market strategy at ClearBridge Investments. Stated.
Apple files landmark iPhone monopoly lawsuit
As my colleagues Brian Hwang, Hannah Rabinowitz, and Evan Perez report, the U.S. Department of Justice and more than a dozen states on Thursday accused Apple of illegally monopolizing the smartphone market. A large-scale antitrust lawsuit was filed.
It is the biggest in a recent string of Big Tech companies to face antitrust complaints from the U.S. government, which is cracking down on a giant industry whose power has been largely unchecked for the past few decades.
“Apple has maintained its monopoly power in the smartphone market not simply by staying ahead of the competition on merit, but by violating federal antitrust laws,” Attorney General Merrick Garland said in the complaint. There is.
“Consumers should not have to pay higher prices just because a company breaks the law,” he added.
The long-awaited lawsuit, filed in the U.S. District Court for the District of New Jersey, alleges that Apple stifles competition through its restrictive app store terms, high fees, and “walled in” approach to the app store. This was raised in response to long-standing arguments from critics. Hardware and Software: Apple is famous for making its technology easy to use, but it also strictly controls and in some cases restricts how third-party companies can interact with the tech giant’s products and services. We achieve this by doing so. In some cases, Apple provides better access and functionality for its products than its competitors.
The company denies and intends to contest the lawsuit’s allegations, adding that the lawsuit could empower governments to “take a tough stance on how people design their technology.”
But Garland said Thursday that Apple’s actions have far-reaching implications.
“Monopolists like Apple threaten the free and fair markets that are the foundation of our economy. They stifle innovation. They harm producers and workers, and they harm consumers. It increases costs,” Garland said Thursday.
Please see here for the detail.
Switzerland receives surprise interest rate cut. Will other central banks move before the Fed?
The Swiss National Bank surprised markets on Thursday by becoming the world’s major central bank to cut interest rates since it began battling post-pandemic price increases.
My colleague Anna Cuban reports that the SNB has cut its inflation forecasts for this year and next, and announced that it will cut borrowing costs by a quarter of a percentage point. “The fight against inflation over the past two and a half years has been effective,” the ministry said in a statement.
Pressure is also mounting on the European Central Bank to cut interest rates for the 20 countries that use the euro. Data released on Thursday suggested the region’s economy contracted in March, supporting arguments that the ECB should break with tradition and cut interest rates ahead of the US Federal Reserve.
The Purchasing Managers’ Economic Index rose slightly in March to 49.9 due to expansion in the service sector, but remained below 50, which is the dividing line between contraction and growth.
European manufacturers have spent much of the past two years battling rising energy costs after Russia’s invasion of Ukraine. Manufacturing remains in deep contraction, according to the latest PMI figures.
Please see here for the detail.
[ad_2]
Source link
