Bonds kicked off the week on the back foot and stocks fluctuated, with traders awaiting the next few jobs readings and a multitude of Federal Reserve speakers for clues on the interest-rate path.
Treasuries fell across the curve, with the move led by longer maturities. Equities saw small moves after the S&P 500 notched its fifth-straight month of gains. Data Monday showed US factory activity unexpectedly expanded in March for the first time since September 2022 — while input costs climbed. Later this week, a report is expected to show employment gains likely continued in March while wage growth moderated. Jerome Powell — who is set to speak Wednesday — said Friday that the Fed isn’t in any rush to cut rates.
“If you did not like what Powell said on Friday, you have a chance to watch him in Prime Time, with a speech directly on the outlook of the US economy,” said Andrew Brenner at NatAlliance Securities. And with the deluge of Fed speakers this week, “expect to be jerked left and right based on what is said.”
Benchmark 10-year yields climbed advanced eight basis points to 4.28%. The S&P 500 hovered near 5,260 after notching its 22nd record this year. The tech-heavy Nasdaq 100 outperformed, with Alphabet Inc. and Nvidia Corp. leading gains in megacaps. AT&T Inc. fell after saying data from 73 million accounts were leaked on the dark web. Gold rose to a record high.
“We viewed Fed Chair Powell’s comments last Friday as remaining consistent with the ‘run hot’ scenario that is poised to keep pushing stocks higher,” said Chris Senyek at Wolfe Research. “That said, trading is likely to get much choppier following an incredibly strong run and little fear baked into stock prices.”
The rally in the S&P 500 has expanded valuations across the board, with an equal-weighted version of the benchmark gauge — where the likes of Nvidia Corp. carry the same heft as Dollar Tree Inc. — topping 17 times earnings. Although that ranks in the 92nd percentile of observations since 1985, Goldman Sachs Group Inc. found that previous periods of similar overvaluation in the benchmark have usually been preceded by further gains.
“Overvaluation alone has not historically been cause for imminent concern,” a team led by Ryan Hammond told clients in a note last week. “Periods of overvaluation often persist for nearly a year and are typically benign if the subsequent economic growth environment is healthy.”
Corporate Highlights:
Key events this week:
Some of the main moves in markets:
Stocks
Currencies
Cryptocurrencies
Bonds
Commodities
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