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01/05/24 Briefing

U.S. stock markets tumbled Tuesday, closing sharply lower. Market participants remained highly concerned regarding unfavorable economic data. Moreover, investors were weighing the outcome of the Fed’s FOMC meeting. All three major stock indexes ended in negative territory. For the month as a whole, these indexes also finished in negative zone.

The Dow Jones Industrial Average (DJI) plunged 1.5% or 570.17 to close at 37,815.92. Notably, 28 components of the 30-stock index ended in negative territory while 2 ended in positive zone. The tech-heavy Nasdaq Composite finished at 15,657.82, plummeting 2.1% or 325.26 points due to weak performance by U.S. corporate behemoths.

The major loser of the Nasdaq Composite was GE HealthCare Technologies Inc. GEHC. The stock price of this medical info systems giant tumbled 14.3%. GE HealthCare currently carries a Zacks Rank #3 (Hold). You can see the complete list today.The S&P 500 tanked 1.6% to finish at 5,035.69. All 11 broad sectors of the broad-market index ended in negative territory. The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Materials Select Sector SPDR (XLB) and the Communication Services Select Sector SPDR (XLC) tumbled 3%, 2.2%, 2.4%, 1.8%, 1.8% and 1.7%, respectively.The fear-gauge CBOE Volatility Index (VIX) was up 6.7% to 15.65. A total of 10 billion shares were traded on Tuesday, lower than the last 20-session average of 11 billion.

Markets Wait for Powell’s Statement

The Federal Reserve will conduct its FOMC meeting on Apr 30-May 1. Market participants are almost certain that the Fed fund rate will stay at its existing range of 5.25-5.5%. However, investors are eagerly waiting for the Fed Chairman Jerome Powell’s post-FOMC statement to find any clue about how long the central bank will keep the higher interest rate intact.

Moreover, investors will try to find out any hawkish comment from the Fed in view of sticky inflation and a resilient labor market. Inflation rate for first-quarter 2024 and March were well above the central bank’s 2% target level.

The Department of Labor reported that the employment cost index rose 1.2% in first-quarter 2024 compared with 0.9% in fourth-quarter 2023. The consensus estimate was a rise of 1%. The index measures worker salaries and benefits.The Conference Board reported that consumer confidence index for April came in at 97%, missing the consensus estimate of 103.5%. The metric for March was revised downward to 103.1% from 104.7% reported earlier. The index for April marked the third consecutive months of decline and the lowest reading since July 2022.The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 6.4% annual gain for February, up from a 6.0% rise in January. The 10-City Composite increased 8.0%, up from a 7.4% increase in the previous month. The 20-City Composite posted a year-over-year increase of 7.3%, up from a 6.6% increase in January.

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