Stocks in the USA initial dip, potentially halting S&P 500 successive triumphs
Stock Market Steps Back on Federal Reserve Decision Anticipation
New York City: Wall Street started the week on a downturn, risking the S&P 500's nine-day winning spree ahead of the Federal Reserve's decision later in the week.
Following a string of volatile trading sessions in early April, spurred by President Donald Trump’s aggressive tariff policies, the stocks have experienced a surge. The White House has projected progress in trade negotiations, and Trump has toned down or delayed some of the most burdensome tariffs.
Analysts suggest that the market might be due for a breather or a dip after such a strong run. Approximately fifteen minutes into trading, the Dow Jones Industrial Average was down 0.5 percent, standing at 41,113.61.
*Stocks Fluctuate as Optimism Dwindles*
The S&P 500 plummeted 0.9 percent to 5,636.71, while the Nasdaq Composite index dropped 1.0 percent to 17,806.36.
The Federal Reserve is anticipated to maintain its recent pause on rate cuts this week, as it waits to gauge how Trump's stop-and-go tariff rollout will impact the health of the world's largest economy.
The majority of economists believe the tariffs implemented since January could lift prices and suppress economic growth in the short term, possibly causing the Fed to delay future moves.
With the prospect of the Federal Reserve keeping rates steady at 4.25%-4.5%, there is a sense of uncertainty on Wall Street, yet the momentum isn't halted immediately. However, mixed economic indicators have triggered reevaluations among market experts.
Job Market Dilemma
April's surprising nonfarm payrolls report (177,000 jobs added vs. 138,000 estimates) has eased immediate calls for rate cuts, pushing 10-year Treasury yields to 4.31% – which traditionally serves as a hindrance for equities. Earlier, weak ADP data (62,000 jobs) underscored ongoing labor market risks.
Tariff-driven Federal Caution
Officials like Christopher Waller emphasize waiting to assess the inflationary effects of the April tariffs. Projections now indicate only two 2025 rate cuts, totaling 50bps. This "higher for longer" stance poses a potential threat to stocks if economic growth slows without policy support.
Market Realignment
Although the CME's FedWatch shows June cut odds falling to 37% following the jobs report, Wall Street's nine-day rally may have already incorporated delayed cuts. The Fed's acknowledgment of a conflict between its twin mandates (jobs vs. inflation) introduces a volatile element, but no clear catalyst has surfaced yet for a sustained pullback. Keeping an eye on shifts in the Fed’s dot plot (currently forecasting a 3.9% median rate by end-2025) remains crucial for predicting future market movements.
- Despite the S&P 500's nine-day winning streak, the market might be due for a pullback or a dip, as suggested by analysts, following the strong run experienced by stocks.
- The Federal Reserve is anticipated to maintain its recent pause on rate cuts this week, leading to uncertainty on Wall Street, yet the momentum isn't halted immediately due to mixed economic indicators.
- In the wake of the Federal Reserve’s potential steadiness in rates, economists believe the tariffs implemented since January could lift prices and suppress economic growth, potentially causing the Fed to delay future moves.
- The recent tariff-driven cautiousness from officials like Christopher Waller indicates only two 2025 rate cuts, totaling 50bps, which poses a potential threat to stocks if economic growth slows without policy support.
- The unexpectedly strong nonfarm payrolls report for April and the subsequent increase in 10-year Treasury yields have eased immediate calls for rate cuts, posing a challenge for the stocks that had benefitted from the anticipated policy support.
- Keeping an eye on shifts in the Fed’s dot plot – currently forecasting a 3.9% median rate by end-2025 – remains crucial for predicting future market movements and deciphering the market's realignment in response to the Federal Reserve's decisions and the ongoing uncertainties of the trade climate.
