Major market averages were mixed on Tuesday as investors eagerly awaited Federal Reserve Chairman Jerome Powell’s speech and traders now expected the first interest rate cut to occur in September. , yields rose.
Early stage and dow (DJI) was +0.1%S&P 500 (SP500) was -0.2%Nasdaq Composite (Comp:IND) was -0.1%.
The 10-year US Treasury yield (US10Y) rose 7 basis points to 4.67%. The two-year bond yield (US2Y) rose 3 basis points to 4.95%.
“Stocks initially started higher as there was no immediate indication of tensions in the Middle East, but the market has slumped as concerns over Israel’s response to the weekend’s attack on Iran reignited,” said Jim Reid of Deutsche Bank. In a turn of events, rising interest rates have also weighed on the economy.”
“It will be incredibly difficult to get this U.S. business cycle back on track, given that we are going from the largest increase in the money supply since World War II to the largest contraction since 1930. “I continue to believe in this,” Reid added.
The possibility of a rate cut in June was also a blow after strong retail sales in March and an acceleration in core retail sales.
According to CME Group’s FedWatch tool, expectations for a rate cut in June have fallen to 21%, but the probability of a rate cut in September is now 70.5%.
Richard Hunter of Interactive Investor said: “Rising tensions in the Middle East have led to a tepid start to earnings season, and further economic data shows little evidence that the need for a rate cut is on the horizon.” As a result, the market is currently in a difficult situation.”
As a result, healthy consumer spending indicates economic strength and prompts the Fed to cut interest rates, especially given that inflation is proving difficult to fall to the Fed’s 2% target. The pressure will be further eased, Hunter added.
On the economic front, Chairman Powell’s speech is scheduled for 1:15 p.m. ET.
The numbers of housing starts and construction permits for March have arrived. The number of housing starts in March was 1,321,000, down 14.7% from the previous month, compared to the expected 1,480,000. At the same time, the number of building permits decreased by -4.3% month-on-month to 1.458 billion, compared to the forecast level of 1.51 billion.
Additionally, the U.S. industrial production statistics for March rose 0.4% from the previous month, matching expectations for a 0.4% rise.
