Antradienis, 27 vasario, 2024

US Stocks Bounce Back as Economic Data Boosts Rate Cut Hopes

US stocks staged a strong recovery on Thursday, following a steep drop in the previous session due to disappointing economic data. The S&P 500 and Nasdaq rose 1% and 1.1%, respectively, while the Dow Jones added 322 points. The market was buoyed by new data showing that the US GDP growth was slightly lower than expected at 4.9% in the third quarter. Reinforcing the case for more interest rate cuts by the Federal Reserve.

What Moved the Market

Corporate News

Tesla gained 3% on speculation that Chinese EV makers could face higher tariffs in the US market. Meta advanced 1.4%, on track for its best year ever. Salesforce climbed 2.7% after getting an upgrade from Morgan Stanley. Boeing rose 0.7% after announcing that it will resume deliveries of its 787 Dreamliner to China.

Divergence between price dynamics and AO (Awesome Oscillator) oscillation. We may expect a correction:

Salesforce price dynamic
Salesforce price dynamic

Housing Market Outlook

The average rate on a 30-year fixed mortgage fell to 6.67%, the lowest level since June, extending the eighth week of decline. This downward trend reflects the expectations of multiple rate cuts by the Federal Reserve in 2024. Lower mortgage rates are attracting more homebuyers to the market. With home builder confidence increasing and new home construction hitting its highest level since May.

Manufacturing and Economic Data

The Kansas City Fed’s Manufacturing Production index stayed at -4 in December. With activity rising for nondurable goods but falling slightly for durable goods. Unemployment claims increased by 2,000 to 205,000, showing the tightness in the US labor market and giving room for the Federal Reserve to keep its terminal rate low.

he Kansas City Fed’s Manufacturing Production index
he Kansas City Fed’s Manufacturing Production index

Economic Growth and Revisions

The US economy grew at an annualized rate of 4.9% in the third quarter of 2023, slightly below the previous estimate but still the strongest growth since Q4 2021. Consumer spending increased less than initially reported, while private inventories, nonresidential investment, residential investment, and government spending were revised up.

GDP Growth rate
GDP Growth rate

Global Market Highlights

European Stocks

European stocks ended slightly lower as major market players took profits from the year-end rally and evaluated the outlook for the ECB’s interest rates in the next year. Consumer cyclical stocks led the losses, with luxury and auto stocks suffering.

Oil Market Developments

WTI crude oil futures dropped below $74 per barrel due to conflicts within OPEC and worries about the group’s ability to balance global prices. Angola’s exit from OPEC after 16 years added to the uncertainties, and rising US production led to the first annual decline in oil prices since 2020.

Cryptocurrency Boom:

Bitcoin and Ether soared, with Ether leading the way with a 2.51% increase.

To sum up, the market remains responsive to economic data and the possibility of more Federal Reserve actions. Investors are closely watching global economic trends, geopolitical events, and central bank policies for hints about the direction of financial markets in the upcoming months.

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