Dow Jones futures will open on Sunday evening, with U.S. markets closed Friday. The Federal Reserve’s favorite inflation report was largely in line, with Fed chief Jerome Powell sounding pleased with Friday’s data.
decisions on interest rates impact both the economy and the stock market. IBD News Editor Ed Carson shares how reactions by each can differ and what investors need to know.” vid-name=”Fed Interest Rate Decisions: Market Influence And Investor Psychology Impact Of Cuts And Hikes” vid-cat=”Industry Insights” vid-date=”03/20/2024″ vid-date-tmsp=”1710938202″ vid-image=”https://www.investors.com/wp-content/uploads/2024/03/cReAVOpP-640×360.jpg” vid-authors=”MEREDITH HEYMAN”
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The stock market rally enjoyed a solid, holiday-shortened week. Growth stocks, especially AI leaders such as Nvidia (NVDA), fell back somewhat, though they generally held above support. The market showed strength shrugging that off, with robust breadth. Small caps led with strong gains, with the Dow Jones and S&P 500 right at record highs. The Nasdaq edged lower as many tech giants retreated.
Nvidia needs more time, but Microsoft (MSFT), Meta Platforms (META) and CrowdStrike (CRWD) are tech leaders pulling back bullishly.
Meanwhile, new AI chip IPO Astera Labs (ALAB) is pulling back from Tuesday’s record high. A continued pause in Nvidia stock and AI plays could let ALAB stock forge a short IPO base.
Meanwhile, China EV makers Nio (NIO), Li Auto (LI) and XPeng (XPEV) are due to report March and first-quarter deliveries early Monday, April 1. EV giant BYD (BYDDF) should report a big rebound in March, either on Monday or Tuesday. Tesla (TSLA) will likely release first-quarter deliveries on Tuesday. Expectations are low for Tesla while Nio and especially Li Auto cut delivery targets in recent days.
Nvidia and META stock are on IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. Nvidia, Meta Platforms and CrowdStrike stock are on the IBD 50 list.
PCE Inflation
The February PCE price index rose 0.3% vs. January, the Commerce Department reported Friday, just below views for a 0.4% rise. January’s PCE gain was revised up to a 0.4% rise. PCE inflation came in at 2.5% vs. a year earlier, in line and just above January’s 2.4%.
The core PCE price index, the Fed’s top inflation gauge, advanced 0.3% vs. January as expected, with the unrounded figure at 0.26%. January’s reading was revised to a 0.5% gain. Core PCE inflation came in at 2.8% vs. a year earlier, meeting estimates and down from an upwardly revised 2.9% in January.
Inflation has proved sticky in recent months, making the Federal Reserve less eager to reduce interest rates.
However, the relatively in-line PCE inflation report should keep a June Fed rate cut in play. The odds of a June Fed rate cut were about 64% on Thursday.
Fed chief Jerome Powell on Friday said it was “good” that there were no ugly surprises in the PCE data, adding that the report “was more or less in line with want we want to see.” He reiterated that policymakers want to be more confident before cutting rates. He noted that cutting rates too soon could be “very disruptive,” but he also said waiting too long could mean “unneeded damage to the economy and the labor market.”
Investors won’t get a chance to respond until Dow Jones futures open Sunday evening, with the real test coming Monday.
The PCE inflation data came as part of the income and spending report. Personal income grew 0.3%, shy of 0.4% forecasts. Consumer spending popped 0.8% vs. views for 0.5%.
Dow Jones Futures Today
Dow Jones futures will open at 6 p.m. ET Sunday, along with S&P 500 futures and Nasdaq 100 futures.
U.S. markets are not trading Friday in observance of the Good Friday holiday. European markets and Hong Kong also were closed Friday and will remain shut on Easter Monday.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally saw modest-to-strong weekly gains outside of some growth plays.
The Dow Jones Industrial Average rose 0.8% in weekly stock market trading, setting a record close Thursday. The S&P 500 index gained 0.4%, just setting an intraday all-time high Thursday. The Nasdaq composite dipped 0.3%, just below peaks. For the quarter, the Dow gained 5.6%, the S&P 500 jumped 10.2% and the Nasdaq leapt 9.1%.
Market breadth was impressive during the week. The small-cap Russell 2000 jumped 2.5%, hitting a two-year high. The Invesco S&P 500 Equal Weight ETF (RSP) gained 1.6%, setting a record high. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rose 0.4% vs. the Nasdaq 100’s 0.5%…
Read More: Dow Jones Futures: Inflation Data ‘Good,’ Powell Says; Will Nvidia AI Chip Peer