Wall Street Continues to Rise Despite Economic Challenges:
Wall Street started the year with strong performance,
supported by economic policies and optimistic investment trends.
Despite challenges posed by inflation and weaknesses in certain sectors,
the markets have shown remarkable resilience,
achieving record gains backed by robust economic indicators.
Contents
Weekly Performance of U.S. Markets
Fluctuations in Stocks and Major Indices
Treasury and Currency Movements
Oil Performance and Related Markets
Economic Outlook and Inflation
Federal Reserve and Monetary Policy Plans
Weekly Performance of U.S. Markets
The steady rise in U.S. stock indices eased slightly near their historical highs,
yet Wall Street recorded its strongest start to a presidential term since Ronald Reagan’s era in 1985.
Despite the impact of declining chipmaker stocks, the S&P 500 index achieved a weekly gain of 2%.
Additionally, the U.S. dollar marked its largest weekly drop since November 2023,
while the MOVE index, measuring Treasury bond volatility, fell to its lowest level since December.
Fluctuations in Stocks and Major Indices
The S&P 500 index fell by 0.3%,
the Nasdaq 100 declined by 0.6%, and the Dow Jones Industrial Average dropped by 0.3%.
Bloomberg’s “Magnificent Seven” index for major companies decreased by 0.4%,
while the Russell 2000 index slipped by 0.3%.
Shares of Nvidia Corp saw a decline,
whereas shares of Meta Platforms surged following
the announcement of its plan to invest $65 billion in artificial intelligence projects by 2025.
Additionally, stocks of companies linked to cryptocurrencies rose,
supported by an executive order issued by Trump to back the industry.
Treasury and Currency Movements
Bond prices rose ahead of the anticipated Federal Reserve decision,
supported by data showing a drop in consumer sentiment
and a slight slowdown in economic activity growth.
The yield on 10-year Treasury bonds dropped to 4.62%,
while Bloomberg’s dollar index fell by 0.5%.
Oil Performance and Related Markets
Oil prices experienced their first weekly decline this year,
driven by calls from the U.S. president to lower prices.
Meanwhile, Russian President Vladimir Putin was willing.
Discussing energy matters with his U.S. counterpart could ease concerns over inflation.
Economic Outlook and Inflation
According to David Lefkowitz from UBS Global Wealth Management,
U.S. markets will likely face volatility this year due
to concerns about investments in artificial intelligence, interest rates, and tariffs.
However, Lefkowitz emphasized that any market downturns could provide buying opportunities,
adding that tariffs are unlikely to have a major impact on economic growth.
Federal Reserve and Monetary Policy Plans
Markets widely expect the Federal Reserve to maintain interest
rates within the current range of 4.25% to 4.5% in the upcoming week.
Interest rate swaps indicate a possibility of two quarter-point rate cuts this year,
though this largely depends on inflation trends.
Oscar Munoz and Gennadiy Goldberg from TD Securities noted
that any policy changes will likely elicit limited market reactions
unless Federal Reserve Chair Jerome Powell signals a dovish stance.
U.S. Corporate Earnings
Don Rissmiller from Strategas commented: “As long as earnings remain strong,
the U.S. economy will stay on solid footing.”
With the start of the earnings season,
Major corporations like Apple and Microsoft are expected to report slower sales
growth due to cautious consumer sentiment and the strong dollar.
Nevertheless, companies like Tesla and Microsoft have shown signs of recovery,
potentially boosting their performance in the second half of the year.
Mark Hackett from Nationwide added,
“Markets continue to follow the ‘buy the dip’ strategy,
reflecting ongoing optimism about investment opportunities.”
Conclusion
Wall Street remains a testament to the strength of the U.S. economy,
bolstered by resilient markets and optimistic investor sentiment
despite inflationary pressures and growth challenges.
Nonetheless, monetary policy decisions and corporate earnings reports
will be pivotal in shaping market directions and require close attention.
Wall Street Continues to Rise Despite Economic Challenges