Economy

The S&P 500 is poised to set a new record as Powell returns to the spotlight

March 7, 2024
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US stocks rose on Thursday, remaining upbeat ahead of the second day of Federal Reserve Chairman Jerome Powell's testimony.

Technology companies took the lead again as the Nasdaq Composite (^IXIC) rose as much as 1.4%, while the S&P 500 (^GSPC) added nearly 1% to touch record levels during the session. The Dow Jones Industrial Average (^DJI) rose 0.5%.

Stocks rose over the past two sessions as the market took stock of Powell's questioning by lawmakers on the economy and monetary policy, which brought no bad news or surprises. The Fed chairman stuck to reiterating the message that the central bank is in no rush to ease policy, although he said interest rate cuts are likely to come this year.

On Thursday, this time before the Senate Banking Committee, the Fed chairman reiterated the central bank's intentions to lower interest rates, provided inflation data continues to show a continued slowdown.

In terms of economic data on Thursday, unemployment claims came in unchanged at 217,000 for the week ending March 2. Continuing claims came in at just over 1.9 million, about 8,000 higher than its previous printing. The non-farm payrolls report is scheduled for release on Friday morning.

Meanwhile, gold (GC=F) rose for a fifth day, hitting a new high above $2,160, as the prospect of a rate cut gave new impetus to the record rally.

Among companies, shares of Victoria's Secret (VSCO) fell more than 25% after the lingerie maker's sales guidance fell short of expectations.

He lives9 updates

  • Trend indicators on Thursday

    New York Community Bancorp (NYCB)

    The stock rose 7% on Thursday after the regional bank cut its dividend to 1 cent per share as part of a sweeping reform plan. New York Community Bancorp said it lost 7% of its deposits over the past month. The disclosure came one day after the bank announced a new CEO and a capital increase from a group led by Steven Mnuchin, the former US Treasury Secretary and Goldman Sachs partner.

    Victoria's Secret (Visco)

    Shares of the underwear maker fell as much as 30% during the session after the company's sales guidance fell short of analysts' expectations. Victoria's Secret expects net sales to reach about $6 billion this year, or lower single digits than last year.

    dead (dead)

    Shares of the social media giant were among the top 5 trading trends on Yahoo Finance on Thursday. The stock touched new highs. Meta shares are up about 44% year to date. The stock is the second highest performing stock this year within the “Magnificent 7” group, behind Nvidia (NVDA), which rose by 85% during the same period.

  • There are more homes for sale this spring, but rising prices may keep buyers on the sidelines

    Yahoo Finance's Danny Romero reports that the housing market's spring selling season could be more robust this year as inventory rises. However, rising interest rates keep buyers on the sidelines.

    New research from Realtor.com It shows that the number of active homes for sale in February jumped by 14.8% compared to the same month last year. This is the fourth straight month of increases for homes on the market.

    “The fact that we started the year with more homes for sale than we've seen on the market since 2020 is a really good move,” Danielle Hale, chief economist at Realtor.com, told Yahoo Finance in an interview.

    Inventory is still down about 40% compared to pre-pandemic levels. At the same time, borrowing costs began to rise. The average 30-year fixed loan was 6.94% as of last Thursday, up from 6.9% the week before, according to Freddie Mac data.

    Read more here.

  • Gold continues to rise as Powell reiterates potential interest rates this year

    Gold (GC=F) continued to rise and hovers near all-time highs as Federal Reserve Chair Jerome Powell reiterated the policymaker's intention to cut interest rates this year, provided inflation data comes in as expected.

    The precious metal rose for a fifth day, touching a record high above $2,170 an ounce before paring gains. Futures were trading at about $1,162 by 11:00 a.m. ET.

    The precious metal tends to rise when interest rates head south and the US dollar declines. On Thursday morning, Federal Reserve Chairman Jerome Powell assured lawmakers of the central bank's intention to cut interest rates later this year, provided inflation data comes in as expected.

    The US dollar fell on Thursday, supporting a rise in the price of a commodity billed in US dollars.

  • Nvidia stock hits a new record and exceeds $900

    Nvidia (NVDA) stock rose more than 2% on Thursday, hitting all-time highs. AI darling shares crossed the $900 level to reach a peak of $909.92 per share during the morning session.

    Nvidia's sales are up 88% year to date. The semiconductor giant was the best performing Magnificent 7 stock this year.

    Social media giant META also reached new highs on Thursday. The stock is up 46% year to date.

  • Stocks opened higher ahead of the Fed chairman's second day of testimony

    Major averages rose on Thursday ahead of Federal Reserve Chairman Jerome Powell's second day of testimony before Congress.

    The Nasdaq Composite (^IXIC) rose 0.7%, while the S&P 500 (^GSPC) rose 0.6%. The Dow Jones Industrial Average (^DJI) also rose 0.5%.

    This rise comes a day after lawmakers questioned Jerome Powell about the economy and monetary policy. Powell stressed that policymakers are in no rush to ease policy, but interest rates are likely to be cut this year. Friday's jobs report will provide investors with clues about the timeline for when interest rates could be cut.

    Meanwhile, Bitcoin (BTC-USD) hovered above $67,000 on Thursday after hitting new highs earlier this week.

  • The New York Central Bank lost 7% of deposits in one month, highlighting new rescue challenges

    New York Community Bancorp (NYCB) lost 7% of its deposits over the course of a month, highlighting the challenges facing a new investor group led by Steve Mnuchin as it outlined its turnaround strategy on Thursday.

    Yahoo Finance's David Hollerith reported that the bank's disclosure in an investor presentation showed that total deposits had fallen to $77.2 billion as of March 5, compared to $83 billion on February 5.

    Nearly 80% of its deposits are currently backed by insurance from the Federal Deposit Insurance Corporation, while 20% are uninsured. It lost $7.8 billion in uninsured deposits over the past month.

    The revelation came a day after the New York central bank made a dramatic attempt to restore investor confidence by announcing a new CEO and pumping in $1 billion from a group led by Mnuchin, the former US Treasury secretary and Goldman Sachs partner.

    NYCB shares were relatively flat in the premarket on Thursday after rising more than 7% in the previous session.

    Read more here.

  • In the box for a long time: Victoria's Secret

    Buy bras from Amazon (AMZN).

    Victoria's Secret ( VSCO ) actually had a disastrous earnings day last night, in contrast to what fellow mall retailer Foot Locker ( FL ) had just a few hours earlier. The intimate apparel company's shares collapsed nearly 30% pre-market, and this is the right move.

    Management noted no improvement in sales trends in February compared to the 6% Q4 decline.

    JPMorgan analyst Matt Boss – who downgraded VSCO today – added the section below in his research note to clients that caught my attention. VSCO appears to be losing more market share to Amazon, a battle the company is unlikely to win. The problem is structural in my view.

    “Notably in terms of lingerie industry data, management noted that the sports bra category outperforms the non-sports bra category (i.e. structured bras), with the broader overall lingerie market split into 30% sports bras versus 70% non-sports bras.” Sports (relative to VSCO plus). Indexing to non-sports bras currently). To this end, management noted that the overall lingerie market declined by mid-single digits in the fourth quarter reflecting a shift toward Value/Amazon as a result of consumer challenge, as well as comp Sportswear like Lululemon (LULU) participates in the sports bra category.”

    Despite terrible quarters from VSCO/FL, there are mall retailers that are winning.

    Take a look below at what Abercrombie & Fitch (ANF) CEO Fran Horowitz told me after another quarter of double-digit sales gains on Wednesday.

  • Amazing analysis for today..

    Maybe it's time to reconsider the Microsoft (MSFT) selloff.

    Over the last 25 trading days, Microsoft shares have fallen 0.4% compared to a 4% advance for the S&P 500. The broader Mag 7 has been trading on the shaky side lately, and Microsoft has not been immune.

    Some new predictions from EvercoreISI analyst Kirk Mattern on Microsoft's AI opportunity could revive the bullish case.

    Here's what he said in a new note to clients today:

    “When compiling our bottom-up analysis of AI Generation and looking out five years, we now estimate that AI Generation could generate up to $82.5 billion in additional revenue in CY28 for Microsoft based on our 'base case' scenario, Which represents a 24% increase in the CY28 revenue estimate (assuming a 9% revenue CAGR from the “23-28 for Microsoft” core). This would also represent $5.10 in additional EPS assuming an additional 45% net margin – less by slightly incremental margins in prior years. The “case” scenario suggests an additional revenue opportunity of $142.8 billion and $12.07 in additional EPS. Our updated 2027 incremental AI revenue estimate of $54.6 billion is $4.2 billion higher US from our previous “base case” forecast as of June 2023. Bottom line: AI monetization opportunity is off to a good start but we're still in the same earnings range and based on our analysis, we expect Gen AI to maintain an upward bias to Microsoft's revenue and EPS estimates going forward Perspective.

    Materne rates Microsoft an Outperform with a price target of $475, 17% above current levels.

  • Deutsche Bank is boarding the Bitcoin rocket ship

    everything is ready.

    Today the Deutsche Bank team came out with a note looking at five reasons why Bitcoin prices have more room to run. It's too early to put you back to sleep by detailing all five reasons, so let me focus on one: the potential Bitcoin halving event in April.

    The investment bank draws attention to Bitcoin's bullish movement around the previous halving events:

    “In the 30 days leading up to the November 2012 halving, prices rose by 5%. A significant increase of 13% was seen before the July 2016 event. More recently, there was a significant price increase of 27% in the month prior to May. The halving in 2020 “

    A useful timeline to see how this has been done historically:

    Bitcoin bulls are waiting for the other halving in April. Bitcoin bulls are waiting for the other halving in April.

    Bitcoin bulls are waiting for the other halving in April. (Deutsche Bank)

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