Stocks Fall to Kick Off This Quarter’s Final Week: Markets Wrap

Stocks took a breather after a rally that drove the market to its best week in 2024, with traders digesting some Fedspeak and awaiting fresh data for clues on the interest-rate outlook.

Equities saw a mild pullback, driven by weakness in some of the technology names that have powered the bull run. Concern about a disconnect between earnings expectations and share prices have grown, with Morgan Stanley and JPMorgan Chase & Co. warning that it’s hard to justify the current lofty valuations if profit acceleration fails to materialize.

“We continue to see sentiment as stretched and think a US equity market pullback is overdue,” said Lori Calvasina at RBC Capital Markets.

The S&P 500 dropped to around 5,220, with most megacaps falling. Intel Corp. and Advanced Micro Devices Inc. slipped on a news report China is limiting the use of foreign chips. Boeing Co. rose after announcing that its chief executive officer will step down. Treasury 10-year yields rose three basis points to 4.23%. The dollar fell.

“Investors looking to put new money to work in the market should wait for a pullback, and while it may not seem like it, the market already had a few minor pullbacks so far this year,” said Clark Bellin at Bellwether Wealth. “They were shallow and quick, but they proved to be good buying opportunities.”

Traders will also keep an eye on a few central bank speakers, with Fed Bank of Chicago President Austan Goolsbee telling Yahoo! Finance he’s among policymakers anticipating three rate cuts this year. His Atlanta counterpart Raphael Bostic reiterated his expectation for one rate cut this year, adding the central bank can afford to be patient as long as the economy holds up.

The Fed’s preferred inflation measure — due Friday when markets will be closed — is anticipated to show still-elevated price pressures. On that same day, Fed Chair Jerome Powell is scheduled to speak as well.

“Problem is that Friday is Good Friday, so the markets are closed,” said Andrew Brenner at NatAlliance Securities. “And to make things more complicated, Thursday is only a half day for bonds. So when are the real allocations to take place? Wednesday for large trades.”

The combination of healthy US economic data, expectations the Fed will cut rates and optimism about artificial intelligence have all driven the S&P 500 up almost 10% this year — leaving many year-end forecasts in the dust.

Goldman Sachs Group Inc. strategists are sticking with their year-end preduction of 5,200 — but have a scenario in which tech megacaps lead the index up to 6,000.

“Although AI optimism appears high, long-term growth expectations and valuations for the largest TMT stocks are still far from ‘bubble’ territory,” the strategists led by David Kostin wrote.

Corporate Highlights:

• Apple Inc., Alphabet Inc.’s Google and Meta Platforms Inc. face the risk of potentially hefty fines as the European Union opened a full-blown investigation into the firms’ compliance with strict new laws reining in the power of Big Tech.
• US aviation authorities are considering drastic measures to curb growth at United Airlines Holdings Inc., including preventing the carrier from adding new routes, following a series of safety incidents.
• Lucid Group Inc. is getting a $1 billion cash injection from its biggest investor, an affiliate of Saudi Arabia’s Public Investment Fund, providing the troubled electric carmaker with a needed lifeline.
• Manulife Financial Corp. has struck another deal to offload some of its less-profitable assets, agreeing to reinsure C$5.8 billion ($4.3 billion) of Canadian policies with RGA Life Reinsurance Co. of Canada.
• Match Group Inc., the owner of dating apps Tinder and Hinge, named two directors to its board following discussions with activist investor Elliott Investment Management.
• Novo Nordisk A/S agreed to buy Cardior Pharmaceuticals for up to €1 billion ($1.1 billion) as the Danish maker of weight-loss drugs continues to expand into treatments for cardiovascular disease.

Key events this week:

• ECB chief economist Philip Lane participates in event in Dublin, Tuesday
• US durable goods, Conference Board consumer confidence, Tuesday
• China industrial profits, Wednesday
• Bank of England issues financial policy committee minutes, Wednesday
• Eurozone economic confidence, consumer confidence, Wednesday
• Fed Governor Christopher Waller speaks, Wednesday
• UK GDP revision, Thursday
• US University of Michigan consumer sentiment, initial jobless claims, GDP, Thursday
• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
• US personal income and spending, PCE deflator, Friday
• Good Friday. Exchanges closed in US and many other countries in observance of holiday. US federal government is open.
• San Francisco Fed President Mary Daly speaks, Friday
• Fed Chair Jerome Powell speaks, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.3% as of 9:31 a.m. New York time
• The Nasdaq 100 fell 0.7%
• The Dow Jones Industrial Average fell 0.2%
• The Stoxx Europe 600 fell 0.2%
• The MSCI World index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.2% to $1.0831
• The British pound rose 0.3% to $1.2640
• The Japanese yen rose 0.1% to 151.23 per dollar

Cryptocurrencies

• Bitcoin rose 1.5% to $67,124.04
• Ether rose 0.9% to $3,445.38

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.23%
• Germany’s 10-year yield advanced three basis points to 2.36%
• Britain’s 10-year yield advanced four basis points to 3.97%

Commodities

• West Texas Intermediate crude rose 1.1% to $81.49 a barrel
• Spot gold rose 0.4% to $2,174.66 an ounce

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