Stocks barely budged in the US stock markets on Monday, following their strongest performance of the year. Traders held onto optimism that the Federal Reserve was ready to ease its tight monetary policy, as the tech-heavy Nasdaq Composite continued its upward trajectory, gaining 0.3%. Meanwhile, the benchmark S&P 500 edged up 0.2%, and the Dow Jones Industrial Average increased by 0.1%, adding roughly 35 points.
Market watchers kept a close eye on the yield of the 10-year Treasury note, which saw a modest increase of about 10 basis points, trading near 4.66%. These developments came on the heels of a surge in major U.S. stock indexes at the end of the previous week. This surge was fueled by a slowdown in U.S. job growth and a cooling of wage inflation, further solidifying expectations for a halt in the Federal Reserve’s interest rate increases.
Investors are eagerly awaiting confirmation from several key Federal Reserve officials set to make appearances throughout the week, including two from Chairman Jerome Powell, as well as regional Fed Presidents John Williams and Raphael Bostic. Their statements will be closely scrutinized for any hints about the central bank’s policy stance.
However, amidst this newfound optimism, some voices on Wall Street sounded cautionary notes. Morgan Stanley strategist Mike Wilson warned that the recent stock market rebound “looks more like a bear market rally rather than the start of a sustained upswing.” Despite these warnings, the market still faces a stream of upcoming quarterly earnings reports, even as the economic calendar remains relatively quiet.
One of the highlights in the upcoming earnings season is Disney’s (DIS) financial results, which are scheduled for release on Wednesday. These results are eagerly anticipated by investors, as they may provide further insights into the performance of the media and entertainment giant.
In the commodities market, oil prices surged after Saudi Arabia and Russia, two major oil exporters, confirmed over the weekend that they would continue their voluntary production cuts. West Texas Intermediate crude futures (CL=F), the U.S. benchmark, saw an increase of over 1%, trading at just under $82 per barrel. Global benchmark Brent crude futures (BZ=F) experienced a more modest gain of just under 1%, trading below $86 per barrel.
The combination of a slowing global economy and indications of a more accommodative monetary policy from the Federal Reserve has given investors greater clarity and potentially instilled greater confidence in the stock market as a whole. Nevertheless, the US stock markets’ observers continue to advise caution, suggesting that the recent enthusiasm may be overdone and warning of possible volatility in the stock market in the weeks to come.
Source: Yahoo Finance
