Mid-Week Market Minute 5.22.24

Stocks Unchanged, Interest Rates Move Higher

Stocks were mostly unchanged in early trading this week as investors await the Federal Reserve meeting minutes followed by earnings results from Nvidia (NVDA) after the close on Wednesday. Nvidia is the third-largest company in the U.S. after rallying more than 90% so far this year, and expectations are high following several earnings beats in previous quarters. Any sign of a slowdown or earnings miss could have a significant impact on the market more broadly, particularly for the tech sector and semiconductors specifically. 

Meanwhile, interest rates moved higher this week following cautious comments from Fed officials on Tuesday. With inflation remaining above the Fed’s target, policymakers seem to agree more progress is needed before the central bank can confidently begin easing policy. The market continues to expect between one and two rate cuts for the remainder of the year, which if true, would likely come in September and December. The next round of inflation data will come later next week in the form of the PCE Core Deflator, which is expected to hold steady at 2.8% on a year-over-year basis. Outside of that, the next jobs report is still a few weeks away, making it difficult to find any near-term catalyst that might change the Fed’s outlook.

All told, the markets have continued to reward long-term investors, with a globally diversified 60% stock/40% bond portfolio higher by about 6% year-to-date.

Source: GSAM, CNBC, JPMorgan

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