On the heels of the many twists and turns that major global Indices have seen in recent months, it may seem that Wall Street is on the cusp of a renewed bull market. Defying expectations, Wall Street traders pushed the S&P 500 up 0.3% at one point over the course of trading Monday, as a confluence of factors seemed to lighten the market mood before a reversal by the end of the day.
S&P 500’s Monday Price Swings
By the ring of the closing bell Monday, despite earlier jumps, the S&P 500 (USA 500) had closed down by 0.2% to start off the week. With a plethora of analysts having foreseen a sustained period of losses throughout the first half of 2023, what could have been behind yesterday’s gains, temporary as they may have been?
A number of causes may have entered into the mix. One key factor could be market expectations regarding the intentions of the Federal Open Market Committee (FOMC), the body responsible for determining the course of the United States’ monetary policy.
Powell Readies for a Breather?
Following the ‘easy money’ policies put into place by Federal Reserve Chairman Jerome Powell, the central bank of the world’s largest economy made a U-turn in the face of inflation rates hitting levels unseen in over a generation. Since March of last year, the Federal Open Market Committee has seen fit to raise interest rates at each of its ten summits.
However, some savvy market watchers are positing that the nearly year-and-a-half battle led by Powell and other members of the FOMC against skyrocketing consumer price increases may be finally drawing to a close. The organisation’s next summit, scheduled to conclude with a press conference on June 14th, may be the first in over a year to end without an interest rate hike.
The Fed may be wanting to take a breath in the midst of the continued efforts to bring American inflation rates down to the ‘ideal’ two-percent annualised level. While waiting for more data in order to decide whether Federal Open Market Committee summits in the second half of the year could necessitate further interest rate hikes, recent data releases seem to be on the positive side. Inflation rises have slowed their roll, while consumer spending and job growth have remained robust. (Source:Bloomberg)
Accordingly, the decision calculus among the United States’ most senior monetary policymakers may have shifted from concerns about not doing enough to rein in inflation, to the chance that overzealous rate hikes could push the world’s largest economy into recession. Time will tell if the S&P 500’s temporary rally can be repeated and sustained over the course of the trading week, giving credence to bullish predictions.
Dow Slips Despite Apple Release
Yesterday, global tech industry leader Apple (AAPL) revealed new offerings to the public at the Worldwide Developers Conference. During the presentation, which featured a keynote speech by Chief Executive Officer Tim Cook, the audience was treated to the news of Apple’s latest proprietary operating system, iOS 17, as well as an updated Macbook Air notebook model. Furthermore, the firm’s mixed-reality headset, with iPhone-like functionality, the Vision Pro, was presented as well.
However, Apple’s new product lines were not enough to keep its stock from falling over the course of the trading day Monday. Despite reaching a peak earlier in the session, the company’s shares marked an over 0.7% decline over the course of Monday’s trading.
Whether influenced by enthusiasm for new Apple products not being enough to push shares up, or a trend reversal from last Friday’s jumps, the Dow Jones Industrial Average (USA 30) fell by nearly 0.6% by the ring of the closing bell.
All in all, despite coming tantalisingly close to bull market territory, and with the prospect of an end to market-dampening interest rate hikes peeking over the horizon, yesterday’s results from the trading floors of New York City may have seemed underwhelming. Traders and investors alike will have to wait and see what the coming days have in store as the week progresses.