S&P 500 (SPY) Report – 04/25/24

Good morning, traders!

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

U.S. stock markets faced a decline Thursday, primarily driven by a downturn in technology stocks following Meta’s announcement of a lower-than-expected revenue forecast. This news particularly impacted investor sentiment as they awaited further earnings reports from other major technology companies. Concurrently, there was a notable decrease in stock futures with the Nasdaq 100, S&P 500, and Dow Jones Industrial Average all recording losses. Meta’s shares plunged by over 15% due to concerns about its heavy investments in AI, which are not expected to yield returns in the short term.

Adding to the market’s worries, the U.S. GDP growth for the first quarter was reported at just 1.6% on an annualized basis, considerably below the anticipated 2.4%. This slowdown in economic growth highlights ongoing challenges within the economy, exacerbated by persistently high interest rates and inflation concerns. These factors collectively raised doubts about the Federal Reserve’s ability to reduce interest rates in the near future.

The economic slowdown was further reflected in the rise of consumer prices, which increased at a 3.4% pace from the previous quarter’s 1.8%, signaling sustained inflationary pressures. This inflation data precedes the upcoming release of the Personal Consumption Expenditures index, which is closely monitored by the Federal Reserve as an inflation gauge. The persistently high inflation and the disappointing GDP figures contributed to a pessimistic outlook for monetary policy easing.

In the tech sector, Meta’s financial guidance set a cautious tone ahead of earnings reports from other significant players like Microsoft and Alphabet, both of which are grappling with high growth expectations, particularly in AI technologies. This scenario underscores the broader market’s sensitivity to tech giants’ performances and their substantial influence on market trends. As these companies navigate the challenges of high expectations and significant investments, their outcomes could significantly sway investor confidence and market directions in upcoming sessions.

Thursday Economic Events:
GDP 8:30am ET – High Volatility Expected
International Trade in Goods 8:30am ET
Jobless Claims 8:30am ET
Wholesale Inventories 8:30am ET – High Volatility Expected
Pending Home Sales Index 10:00am ET
EIA Natural Gas Report 10:30am ET
7-Yr Note Auction 1:00pm ET

Fed Speaker Scheduled:
Fed in Blackout Period

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