Current state of the stock market in the US

The US stock market had a shaky day on Tuesday, with initial gains fading as investors continued to weigh the possibility of future interest rate cuts in light of new corporate earnings. At midday, the S&P 500 (^GSPC) was trading flat, while the Nasdaq Composite (^IXIC) was down about 0.4%. The Dow Jones Industrial Average (^DJI) initially opened flat but later gained around 0.2%.This cautious market sentiment came after Federal Reserve Chair Jerome Powell’s warnings about the Fed’s careful approach to policy decisions, disappointing those hoping for early rate cuts.Investors are closely monitoring corporate earnings to see if they could boost stock performance. Spotify (SPOT) shares surged after the company’s strong guidance, while Eli Lilly’s (LLY) stock also rose on better-than-expected profit forecasts. Ford (F) is expected to report after the market close. Additionally, comments from Cleveland Fed president Loretta Mester, cautioning against premature rate cuts, further influenced market dynamics.Fed officials Patrick Harker, Susan Collins, and Neel Kashkari are also scheduled to speak later today.Tue, February 6, 2024 at 9:27 AM PSTLoretta Mester: ‘Mistake’ to cut rates too soonCleveland Fed president Loretta Mester weighed in on the rate cut debate, echoing Powell’s concerns about moving rates down prematurely.”It would be a mistake to move rates down too soon or too quickly without sufficient evidence that inflation was on a sustainable and timely path back to 2%,” she said. “Doing so would undermine all the good work that has gone into getting inflation to this point.”Mester also warned that maintaining the current level of the nominal fed funds rate for too long could pose an increasing risk to the maximum employment part of the Fed’s mandate, if year-ahead inflation expectations continue to decline.Jerome Powell had previously downplayed the likelihood of a March rate cut and markets now expect rate cuts to begin during the May meeting, with a roughly 66% chance priced in. However, bets on rate cuts have slightly decreased, down from an 85% chance just a week ago.Mester emphasized the importance of risk management in future monetary policy decisions, proposing that if the economy evolves as expected, rates may be moved down later in the year.Tue, February 6, 2024 at 8:58 AM PSTStocks wobble in midday tradingUS stocks lost momentum by midday trading on Tuesday, amid ongoing discussions about potential interest rate cuts ahead of new corporate earnings. At midday, the S&P 500 (^GSPC) was down about 0.1%, while the Nasdaq Composite (^IXIC) dipped around 0.3%. The Dow Jones Industrial Average (^DJI), which initially opened flat, edged up about 0.1%.Tue, February 6, 2024 at 8:10 AM PSTPalantir’s AI breakthroughPalantir (PLTR) stock surged over 25% on Tuesday morning following the defense software maker’s advancements in artificial intelligence.”I’ve never before seen the level of customer enthusiasm and demand that we are currently seeing from [artificial intelligence platforms] in US commercial,” Palantir CFO Ryan Taylor stated during the company’s earnings call on Monday night.The company’s Artificial Intelligence Platform (AIP) was prominently featured throughout the call, contributing to the expectation of nearly 40% US commercial revenue growth in 2024. The surge in stock price reflects investor excitement over AI technologies, despite concerns about overvaluation. Jefferies equity analyst Brent Thill acknowledged the AIP’s outperformance but maintained caution due to the stock’s high valuation relative to the large cap average.Read more here.Tue, February 6, 2024 at 7:40 AM PSTSpotify’s performance and outlookSpotify Technology (SPOT) reported fiscal fourth quarter earnings on Tuesday, falling short of expectations. However, the company’s strong guidance boosted shares in early trading as it continues to focus on profitability amid recent strategic changes. The company reported a smaller operating loss than the revised guidance for Q4 and anticipated a strong Q1 operating income. Subscriber growth, gross margins, free cash flow, and average revenue per user also saw improvements. Shares surged up to 11% shortly after the opening bell.Read more here. Tue, February 6, 2024 at 6:33 AM PSTUS stocks open mostly higherUS stocks opened mostly higher on Tuesday, with the S&P 500 (^GSPC) up about 0.2% and the Nasdaq Composite (^IXIC) rising around 0.3%. The Dow Jones Industrial Average (^DJI) traded flat. Investors are focusing on incoming earnings reports and speeches from several Fed officials.

Author: OpenAI