Last Updated: 4:00 PM EST
Stock indices finished today’s trading session in the red after commentary from the Federal Reserve. The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 1.55%, 1.23%, and 1.36%, respectively.
Minneapolis Fed President Neel Kashkari emphasized the need for inflation to fall more before the Fed could consider interest rate cuts. He even hinted at the possibility of withholding rate cuts should inflation not decelerate as hoped.
Cleveland Fed President Loretta Mester and Chicago Fed President Austan Goolsbee mirrored this stance at separate events, both stating that more tangible signs of inflation moving closer to the Fed’s 2% objective are needed. This signals a cautious approach to interest rate decisions, reminding investors that a shift in monetary policy hinges closely on inflation trends.
In addition, the Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real-time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 2.5% in the first quarter.
This is lower than its previous estimate of 2.8%, which can be attributed to recent releases from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis.
Furthermore, the Department of Labor released its Initial Jobless Claims report, which came in worse than expected. In the past week, 221,000 people filed for unemployment insurance for the first time. Expectations were for 213,000 individuals.
First Published: 5:12 AM EST
U.S. futures inched higher on Thursday morning as investors assessed remarks made by Jerome Powell, the Chairman of the U.S. Federal Reserve. Notably, futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were up by about 0.42%, 0.3%, and 0.26%, respectively, at 4:37 a.m. EST, April 4.
Yesterday, Powell stated that policymakers require further evidence of inflation nearing the 2% target before considering an interest rate cut in June. Consequently, according to the CME FedWatch tool, the proportion of investors expecting a rate cut during the June FOMC meeting has decreased to 58.5%, down from 70% in the previous month.
Analysts at Australia and New Zealand Banking Group Limited (AU:ANZ) believe that the Fed is poised to lower rates this year, but the timing will be determined by inflation data. They anticipate that the central bank will initiate rate cuts around July. Additionally, Kathy Bostjancic, chief economist at Nationwide Mutual Insurance Co., suggests that a rate cut in June could be feasible if the inflation data from March onwards indicates some moderation.
In terms of key economic data, investors are awaiting the release of the Initial Jobless Claims report for the week ended March 30. On the corporate earnings front, Lamb Weston (LW), Simply Good Foods (SMPL), and Lindsay (LNN) will report their quarterly numbers today.
Meanwhile, the U.S. 10-year treasury yield was up at the time of writing, floating near 4.36%. At the same time, WTI crude oil futures trended lower, hovering near $85.35 per barrel as of the last check. This surge was supported by several factors, including OPEC+ output cuts, supply disruptions, and a solid demand outlook in the U.S.
Elsewhere, European indices opened muted today as investors evaluated Powell’s comments on monetary policy. Also, traders await the release of the European Central Bank’s latest policy meeting minutes later today.
Asia-Pacific Markets Ended Higher on Thursday
Asia-Pacific indices ended today’s session in the green as investors assessed the Fed chair’s remarks and retail sales figures from Hong Kong.
Japan’s Nikkei and Topix indices rose 0.91% and 0.94%, respectively.
Investors should note that the Hong Kong and China markets remain closed for a public holiday.
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