INTC led a rally in tech stocks sending the averages modestly higher. NVDA announced it would invest $5 billion in INTC causing shares of this beleaguered chipmaker to surge 30%, the greatest advance in four decades.
Long dated Treasuries, however, sold off following the headlines that weekly jobless claims dropped the most in nearly four years, suggesting companies are still holding onto workers. Weekly claims are notoriously volatile thus more attention should be focused on the four-week moving average.
The Federal Reserve “dot plot” or the personal outlook of each member of the FOMC, penciled in a “weak” outlook of potentially two more interest rate cuts this year. Almost half of the 19 member FOMC expects just one or no more cuts this year, the result of rising inflation and economic growth. One participant (views are anonymous) believes the fed funds rates will be higher at year’s end than it is now. Six shows no additional cuts in 2025.
Wow! Talk about dissention. Has the political interference affected the Committee’s perspective? Nothing is ever political, to believe so is naïve at best.
The 10-9 split (nine members see one or none and 10 see two or more cuts by year’s end) suggests that the path of monetary policy is contingent, not pre pre-ordained and the market will trade based upon the incoming data rather than a neat one-way narrative.
Writing it differently, the FOMC is not sending a single message. It is sending two credible messages at the same time where volatility may increase based upon the released data, data that many believe is suspect for a myriad of justified and unjustifiable reasons.
Wow! Another level of uncertainty.
What will happen today?
Last night the foreign markets were mixed. London was up 0.02%, Paris up 0.22% and Frankfurt down 0.25%. China was down 0.30%, Japan down 0.57% and Hang Seng up 0.01%.
Futures are flat. The 10-year is off 9/32 to yield 4.14%.
