Thursday saw a bullish close for US stocks, buoyed by the stellar performance of leading tech companies. Investors kept a keen eye on economic indicators and Federal Reserve announcements, seeking clues about the Fed’s future policy direction. The S&P 500, Nasdaq 100, and Dow all registered gains, with tech heavyweights leading the rally. Apple and TSMC emerged as the day’s top performers, thanks to a Bank of America upgrade and impressive corporate results, respectively.
Tech Powerhouses Boost Markets
The S&P 500 posted a 0.88% gain, while the Nasdaq 100 outshone with a 1.35% rise, powered by robust showings from tech powerhouses. Apple’s stock climbed over 3.26% following a buy rating from Bank of America, which forecasted a potential 20% upside in the next year. TSMC shares listed in the US also skyrocketed by 10.08%, driven by the chipmaker’s strong financial results.
Fed’s Firm Stance Influences Yields
The Federal Reserve’s firm stance led to a spike in Treasury yields, tempering expectations of a rate cut by March. Atlanta Fed’s Bostic expressed that he doesn’t foresee lower rates until the third quarter. This view, along with lower-than-expected initial unemployment claims, underscored the labor market’s strength and gave the Fed room to maintain its firm stance into Q2 to tackle inflation worries.
Housing Market Shows Mixed Signals
The housing market presented a mixed picture, with building permits in December 2023 rising by 1.9%, exceeding market forecasts. However, housing starts fell by 4.3% month-over-month to an annualized rate of 1.46 million in December. Single-family housing starts saw the steepest drop since July 2022, while multi-segment permits rebounded from a three-year trough. These contrasting trends underscore the intricate dynamics at play in the US housing market.
Mortgage Rates Take a Dip
In a positive turn for the housing market, the average rate on a 30-year fixed mortgage fell to 6.60%, the lowest since May 2023. This drop, despite marginal increases in Treasury yields, offered a glimmer of hope for first-time homebuyers sensitive to housing affordability shifts. However, the dip in purchase demand could exacerbate the strain on the already scarce housing inventory.
Energy Markets and Geopolitical Factors
WTI crude futures climbed to $74 per barrel, bolstered by robust demand projections from the IEA and OPEC. Geopolitical tensions in the Middle East and disruptions to US production added to the price hike. US crude oil inventories dropped by 2.492 million barrels, outpacing market predictions, reflecting the effects of geopolitical developments and weather-induced disruptions.
Currency Trends and Central Bank Updates
The US dollar index nudged higher, hitting around 103.6, as recent economic data hinted at a possible delay in Fed rate cuts. ECB policymakers adopted a cautious approach, recognizing the challenge of achieving the 2% inflation target by 2025. Market expectations for rate cuts are being recalibrated in response to firm remarks and high inflation data.
Cryptocurrency Market Fluctuations
Bitcoin and Ether registered declines, with Bitcoin sliding by 2.86% and Ether dipping 2.54%. Market players kept a close watch on the cryptocurrency market amidst ongoing fluctuations.
US markets witnessed gains, propelled by the tech sector, while a blend of economic signals and central bank communications swayed investor sentiment. The housing market, mortgage rates, and energy markets introduced additional layers of complexity to the financial landscape. As geopolitical events and central bank policies continue to mold market dynamics, investors stay alert in navigating the ever-evolving economic terrain.