S&P 500 (SPY) Report – 03/21/24

Good morning, traders!

The S&P 500 ($SPY) is trading above  yesterday’s close. Let’s get into it…

US stock indexes reached all-time highs, with the Dow Jones, Nasdaq Composite, and S&P 500 all closing at record levels yesterday. This surge was influenced by the Federal Reserve’s decision to leave interest rates unchanged while projecting three rate cuts in 2024, despite previous concerns over persistent inflation. The unchanged rates, alongside optimistic future projections, spurred investor confidence, leading to significant gains across the board.

The Federal Reserve maintained interest rates at a 23-year high, keeping the benchmark overnight borrowing rate between 5.25% and 5.5%, as it has been since July. Despite this, the central bank indicated potential rate cuts in 2024 through its “dot plot” projections. Fed Chair Jerome Powell emphasized that the robust job market would not hinder the Fed’s plans to reduce rates, soothing investors’ fears of fewer-than-expected rate cuts due to recent high inflation reports.

Investor sentiment remained positive, with futures for major stock indexes like the S&P 500, Dow Jones, and Nasdaq showing upward trends following the Fed’s announcements. This optimism was underpinned by the Federal Reserve’s signals that it would delay but not reduce the anticipated rate cuts, countering concerns over stringent borrowing costs. Additionally, global stock markets experienced gains, reflecting relief from the Fed’s policy stance and Jerome Powell’s reassurances.

Internationally, the Swiss National Bank reduced interest rates ahead of other central banks, signaling a potential peak in global financial tightening. This move, along with the Fed’s decisions, buoyed market confidence. On the corporate side, Reddit’s upcoming IPO and Micron’s positive revenue forecast due to AI hardware demand highlight the diverse factors contributing to the current market dynamics beyond central bank policies.

Thursday Economic Events:
Jobless Claims 8:30am ET – High Volatility Expected
Philly Fed Mfg Index 8:30am ET
Current Accounts 8:30am ET
PMI Composite Flash 9:45am ET – High Volatility Expected
Existing Home Sales 10:00am ET – High Volatility Expected
Leading Indicators 10:00am ET
EIA Natural Gas Report 10:30am ET

Fed Speaker Scheduled:
Michael Barr 12:00pm ET

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