Tag: Wall Street

Wall Street is slipping Tuesday and giving back some of its big gain from the day before

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The S&P 500 was 0.5% lower in early trading, coming off its best day in nearly two months. The Dow Jones Industrial Average was down 240 points, or 0.6%, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.

Eversource Energy tumbled 5.9% for one of the worst losses in the S&P 500 after it said it could take a hit of up to $1.6 billion against its results for the end of 2023. It’s negotiating the sale of its stake in several offshore wind projects, and it may need to account for a lower value for them due to several challenges.

Tech stocks were also back to sinking, a day after helping to lead the market. Microchip Technology fell 1% after it said it expects to report a worse drop in revenue than it expected for the end of 2023 from the prior quarter. It said a “weakening economic environment” pushed customers and distributors to receive fewer shipments and pull out of inventories instead.

Another tech company, Unity Software, sank 3.8% after it said it would cut about a quarter of its workforce or 1,800 positions.

Also Read: US Steel sale may deserve serious scrutiny, says White House

Boeing was falling again, but not as much as on Monday, the first trading day after one of its jets flying for Alaska Airlines suffered an in-flight blowout over Oregon. Its stock was down 1.9% after tumbling 8% Monday. Spirit AeroSystems, which makes fuselages and other parts for Boeing, fell 1.4%.

Elsewhere in the airline industry, JetBlue Airways lost 6% after its chief executive, Robin Hayes, said he will step down for health reasons. He will be replaced by JetBlue’s current president, Joanna Geraghty, who will become the first woman to lead a major U.S. airline.

Financial markets have had a slow start to the year after roaring into the end of 2023. The S&P 500 had leaped to nine straight winning weeks to close out the year, mostly on rising hope that the US economy will remain resilient and the Federal Reserve will cut interest rates sharply through 2024.

Some mixed data recently has bolstered criticism saying Wall Street may have gotten too optimistic about the number of rate cuts coming. The Federal Reserve has already raised its main interest rate to the highest level since 2001, hoping to grind down the economy and investment prices to get inflation under control.

With inflation down considerably from its peak, the Fed has indicated it may cut rates three times through 2024. That would give investment prices a boost and relax the pressure on the economy and financial system.

Also Read: US GDP growth in third quarter falls short of expectations at 4.9%

But traders are still betting on a better than 50% probability for at least six cuts, or double the Fed’s projection, according to data from CME Group. Critics say such a high number is unlikely unless the economy falls into a recession.

Treasury yields have already slid on anticipation of rate cuts, and they were holding relatively steady on Tuesday. The yield on the 10-year Treasury was holding at 4.01%.

In the oil market, crude prices clawed back some of their sharp losses from the day before, when Saudi Arabia made moves hinting at weakening demand. A barrel of benchmark US crude rose 1.2% to $71.59. Brent crude, the international standard, gained 1.4% to $77.22.

This week’s headline events for Wall Street are likely to come toward the end of it. On Thursday, the US government will give its latest monthly update on inflation at the consumer level. Continued progress there could show whether Wall Street’s hopes for rate cuts are justified or fanciful.

On Friday, big companies in the S&P 500 will begin reporting their results for the final three months of 2023. The broad expectation is for companies in the index to report modest growth in earnings per share from a year earlier.

Also Read: US jobless claims inch up, but remain historically low amidst Fed’s tightening

In stock markets abroad, Japan’s Nikkei 225 rose 1.2% to notch its highest close since 1990. Indexes elsewhere had more modest moves, with many edging lower.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Big tech aids Nasdaq’s best single-day gain in two months, Boeing tumbles

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A rally in big tech sent US stocks higher at the start of a week that will bring key inflation data and bank earnings.

The Nasdaq 100 outperformed, with Nvidia Corp. surging after announcing new products to help the personal computer industry lure consumers with artificial-intelligence PCs. Boeing Co. sank as its 737 Max 9 model was temporarily grounded by authorities. Treasury yields fell alongside the dollar. Oil slid to around $70.

Equities rebounded after mixed US economic data capped a week that saw equities sink the most since October on bets the Federal Reserve was in no rush to cut rates.

“The valuation-led year-end rally pulled potential gains from 2024 into 2023, making this a tricky year to prognosticate — especially as data are becoming more mixed and futures markets show that Fed rate cuts are already factored in,” said Robert Teeter, managing director of Silvercrest Asset Management.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1.4% as of 4 PM New York time
• The Nasdaq 100 rose 2.1%
• The Dow Jones Industrial Average rose 0.6%
• The MSCI World index rose 0.9%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.1% to $1.0956
• The British pound rose 0.3% to $1.2753
• The Japanese yen rose 0.3% to 144.14 per dollar

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian shares are mixed, with most markets shut, after Wall Street’s 8th winning week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian shares were mixed on Monday after Wall Street capped its eighth straight winning week with a quiet finish following reports showing inflation on the way down and the economy potentially on the way up.

Tokyo’s Nikkei 225 added 0.2% to 33,225.45 and the Taiex in Taiwan gained 0.1%. Bangkok’s SET was up 0.2%. The Shanghai Composite index lost 0.3% to 2,905.79.

Most markets in the region and beyond were closed for the Christmas holiday. The Indian markets too were closed on Monday, December 25, for the Christmas holiday.

On Friday, the S&P 500 rose 0.2% to sit less than 1% below its record set nearly two years ago, at 4,754.63. The Dow slipped less than 0.1% to 37,385.97, and the Nasdaq gained 0.2% to 14,992.97.

With its eight straight weekly gains, the S&P 500 is in the midst of its longest winning streak since 2017.

Wall Street’s focus was squarely on a suite of economic reports released Friday that led to some swings in Treasury yields.

The measure of inflation the Federal Reserve prefers to use slowed by more than economists expected, down to 2.6% in November from 2.9% a month earlier. It echoed other inflation reports for November released earlier in the month.

Spending by U.S. consumers unexpectedly rose during the month. While that’s a good sign for growth for an economy driven mainly by consumer spending, it could also indicate underlying pressure remains on inflation.

Other reports on Friday showed orders for durable manufactured goods strengthened more in November than expected, sales of new homes unexpectedly weakened and sentiment for U.S. consumers improved.

The Federal Reserve is walking a tightrope, trying to slow the economy enough through high interest rates to cool inflation, but not so much that it tips into a recession. A stronger-than-expected economy could complicate the balancing act.

The yield on the 10-year Treasury was at 3.90% early Monday, roughly its same level from late Friday. It is still down comfortably from October, when it was above 5% and putting painful downward pressure on the stock market.

Falling yields have been a primary reason the stock market has charged roughly 15% higher since late October. Not only do they boost the economy by encouraging borrowing, they also relax the pressure on the financial system and goose prices for investments. They’ve been easing on hopes that inflation has cooled enough for the Federal Reserve to cut interest rates through 2024.

Traders are largely betting the Federal Reserve will cut its main interest rate by at least 1.50 percentage points by the end of next year, according to data from CME Group. The federal funds rate is currently sitting within a range of 5.25% to 5.50% at its highest level in more than two decades.

In currency dealings, the U.S. dollar fell to 142.18 Japanese yen from 142.49 yen. The euro slipped to $1.1007 from $1.1019.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

S&P 500 logs its worst day in two months as global rally stalls

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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High-flying stocks notched one of their worst days in months Wednesday after Wall Street warned of a pullback on the rally ignited by the Federal Reserve’s pivot last week.

The Nasdaq 100 ended the session down 1.5%, the biggest one-day drop in eight weeks, as the tech-heavy benchmark drew back from its latest all-time high. The S&P 500 fell at a similar pace in its steepest drop since September 26.

Some in the market speculated that expiring zero-day options traded Wednesday helped accelerate the sell-off as options dealers sold more to rebalance their positions before expiration.

Relative strength readings on the gauges had been trading at levels typically seen before a decline. Wall Street’s fear gauge — the VIX — also rose sharply, it has been trading near multi-year lows.

Newedge Wealth’s Cameron Dawson warned of the market risks.

“It certainly looks like it has become very one-sided, and it is a scary world when everybody gets on one side of the boat,” the chief investment officer of Newedge Wealth, told Bloomberg Television. “The market is very extended, we do see it being very overbought. But we’re in this melt-up period and so oftentimes things can get even sillier before they really do have a pullback.”

Jim Caron, portfolio solutions CIO at Morgan Stanley Investment Management, was also cautious looking ahead to the new year. “It’s going to get a lot rockier and a lot more uncertain into the future.”

Treasuries powered ahead with the yield on the policy-sensitive two-year notching a 10 basis point move, the 10-year rate fell to 3.9%. British 10-year debt led the global bond rally following data showing a slowdown in UK inflation.

Traders also digested data showing US consumer confidence in December rose by the most since early 2021 on Wednesday. The second-straight monthly increase showed Americans were less concerned about a recession, but economists are still keeping a wary eye on the jobs market.

“While a sustained improvement in confidence would be a positive signal about consumer attitudes and spending, a loosening in labor market conditions owing to a restrictive policy stance is likely to weigh on demand, consumption and growth going forward,” Rubeela Farooqi at High Frequency Economics wrote.

Separately, sales of previously owned US homes edged higher in November off of a 13-year low, according to a National Association of Realtors report, earlier data showed mortgage rates fell to their lowest since June.

Some of Wall Street’s biggest bulls heading into 2023 remained undaunted at the prospect of more strength next year. Fundstrat Global Advisors LLC’s Tom Lee, who came closest to predicting the trajectory of the S&P 500 for this year among strategists tracked by Bloomberg, sees the benchmark hitting 5,200 in 2024.

Investors are also starting to weigh risks stemming from potential shipping delays and freight cost increases, as companies divert cargoes away from the Red Sea to avoid militant attacks. This rerouting will mean higher shipping costs and longer delivery time, Bloomberg Economics wrote in a note.

The focus now turns to upcoming data readouts, including Thursday’s GDP print and Friday’s data on personal consumption expenditures — the Fed’s preferred inflation gauge.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Wall Street’s AI craze drives Nasdaq up 1.5% overnight ahead of US jobs report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A rally in megacaps spurred a rebound in stocks on speculation the artificial-intelligence boom will keep fueling market gains.

Traders brushed off any jitters surrounding Friday’s US jobs report to reignite the trade that’s driven the Nasdaq 100 up over 45% this year.

Optimism around AI resurfaced, with Alphabet Inc. up almost 5.5% a day after Google released Gemini, the “largest and most-capable AI model” it has ever built. Advanced Micro Devices Inc. also rallied after saying this week its new accelerator chips will run AI software faster than rival products.

“Artificial intelligence has potential to drive productivity gains sharply higher in 2024 and beyond,” said Yung-Yu Ma at BMO Wealth Management. “Resilience, adaptability and innovation have been hallmarks of the economy in 2023, and we see those factors carrying us through in 2024 as well.”

The Nasdaq 100 rose 1.5% and the S&P 500 halted a three-day drop. Treasuries saw small moves, with the 10-year yield edging higher to around 4.15%. Hawkish signals from the Bank of Japan drove the yen up over 2%. The dollar fell.

Krishna Guha at Evercore says he’s not “buying the idea” that the BOJ will seriously consider a surprise hike in December. “We think January is much more plausible,” he noted. “So while the direction of travel is right, today’s tactical trades have likely overshot.”

In a week jam-packed with labor-market readings, data showed continuing applications for US jobless benefits fell by the most since July. Despite the decline, continuing claims are still near a two-year high amid growing evidence of a cooling labor market. The data precedes the government’s monthly jobs report, which is forecast to show a pickup in hiring in November and the unemployment rate holding at 3.9%.

Optimism about disinflation and potential rate cuts next year played a big part in the recent stock rally. Yet a reading of cross-asset volatility shows risks aren’t as muted as they may appear. The gap between the MOVE Index, which tracks interest-rate volatility, and the VIX gauge of stock price swings has once again widened — suggesting rate markets remain choppy and could spark stress for equities at any time.

Marko Kolanovic at JPMorgan Chase & Co. warned clients that equities and other risk assets won’t be able to sustain any potential rallies without substantial rate cuts by central banks — and he doesn’t anticipate that unless markets drop severely or the economy stalls. For that reason, he said investors should opt for cash or bonds over stocks.

“This is a catch-22 situation,” Kolanovic said. “This would imply that we would need to first see some market declines and volatility during 2024 before easing of monetary conditions and a more sustainable rally.”

Meantime, Bank of America Corp.’s quant strategists say that after the big tech-fueled rally in 2023, the S&P 500 has the potential to rise next year — even without their support. Concerns about narrow market breadth are “misplaced” as bull markets in the past four decades — outside of the dotcom bubble — have always ended with far better breadth, they noted.

“Unlike this year during which the ‘Magnificent 7’ did 70% of the work, we expect broader leadership,” said Savita Subramanian, referring to contributions from the likes of Apple, Nvidia and Microsoft to the rally.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

S&P 500 reports one of its best November gains in a century

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Wall Street saw a late-day rebound, with stocks notching one of their biggest November rallies on record, fueled by speculation the Federal Reserve will put an end to its aggressive hiking campaign.

After this month’s $3 trillion surge, the S&P 500 is now just 5% away from its all-time high. The US equity benchmark climbed over 8% in November — a feat achieved fewer than 10 times during that same month since 1928, according to data compiled by Bloomberg.

It was also the gauge’s biggest monthly gain since July 2022. Treasuries lost steam after a historic rally. The dollar closed higher, but posted its worst month in a year.

US consumer spending, inflation and the labor market all cooled in recent weeks — adding to evidence that growth is gradually slowing. The core personal consumption expenditures price index, the Fed’s preferred gauge of underlying inflation, met economists’ estimates.

“This is likely to cement expectations that the monetary policy inflection point is close, and the Fed will make at least one rate cut in the first six months of 2024,” said Sonu Varghese, global macro strategist at Carson Group. “Fed officials have already acknowledged that inflation is easing, and that can happen in the face of a strong economy and low unemployment, essentially laying the groundwork for rate cuts.”

In a favorable sign for equity optimists, a Bloomberg Intelligence model known as the Economic Regime Index shows that the worst of America’s macro pains appear to have passed.

The index dropped back into recession territory last month after showing nearly a full rebound earlier this year from its trough in late 2022. While the model still signals potential economic weakness ahead, as long as it stays above its lows the outlook is favorable for the S&P 500, says Gina Martin Adams, chief equity strategist at BI.

Traders also continued to keep a close eye on the latest remarks from US officials. Fed Bank of New York President John Williams reiterated the benchmark lending rate is at or near its peak and said policy is “quite restrictive.” His San Francisco counterpart Mary Daly said rates are in a “very good place” to control inflation, though she’s not thinking about cuts and that it was too soon to say if hikes are finished.

“It is still too early to eliminate the tightening bias in the Fed’s forward guidance,” said Brian Rose, senior US economist at UBS Global Wealth Management. “Fed Chair Jerome Powell will make a public appearance on Friday, and we expect him to be careful to avoid sounding too dovish.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian stocks erase gains as further data awaited

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian stocks swung to a loss and US equity futures fell as traders awaited further data from the US, Europe and China this week to see if the November rally can be sustained.

Key data points ahead include euro zone inflation numbers, China PMIs and the US PCE deflator all on Thursday, before US, European and Chinese PMIs on Friday, along with a number of central bank speakers. Asian markets had little direction Monday following the holiday shortened US post-Thanksgiving session Friday.

The MSCI gauge of Asian equities relinquished opening gains of as much as 0.4%. China stocks led declines with the Hang Seng China Enterprises Index dropping as much as 1.4%. The yen strengthened against all except one of its Group-of-10 peers.

US stock futures dropped in Asia after the S&P 500 capped a fourth week of gains Friday, when the VIX — Wall Street’s “fear gauge” and a measure of equity volatility — fell to its lowest since January 2020.

This week, investors will be looking especially closely at Chinese activity data to gauge the health of the world’s second largest economy. Traders will be assessing shadow banking stocks after Chinese authorities said they recently opened criminal investigations into the money management business of Zhongzhi Enterprise Group Co.

US stocks are likely to extend the rally but a “modest pullback would not surprise,” said Tony Sycamore, an analyst at IG Group in Sydney. “End of month, early December looks like a good candidate for a pullback to rebuild energy and to set up for the end of year fireworks.”

The dollar was mixed in early Monday trade after Bloomberg’s dollar index slipped 0.5% last week.

The US currency may “remain heavy” for most of the week as fund managers adjust hedges and cash heads into developing economies, Commonwealth Bank of Australia strategists including Joseph Capurso wrote in a note to clients. “The backdrop of low volatility and expectations for a soft landing in the US economy supports portfolio capital flows into emerging markets,” they wrote.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tech giants Nvidia, Microsoft hit new records as Nasdaq climbs to a 22-month high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The stock market extended its powerful November rally ahead of Nvidia Corp.’s results, with Wall Street also breathing a sigh of relief as a $16 billion sale of 20-year Treasuries lured bond buyers.

Shortly after the auction results, US 10-year yields reversed course and fell to around 4.4%. The S&P 500 closed at the highest since August while the Nasdaq 100 hit a 22-month high. Both Nvidia and Microsoft Corp. climbed to fresh peaks amid a revival of the artificial-intelligence bid. In late trading, Zoom Video Communications Inc. rose on better-than-expected sales. The dollar dropped to an 11-week low.

“We remain positive on equities and expect a broadening of the rallies recently experienced as the US economy continues on a sustainable economic expansion albeit at a modest pace,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management.

As the earnings season winds down, investors will be on the lookout for results from a handful of retailers and tech companies.

Nvidia’s quarterly results on Tuesday could exceed sky-high investor expectations thanks to strong demand for generative AI. Best Buy Co., Nordstrom Inc. and Lowe’s Cos. are set to post slumping sales, reflecting the slowdown in discretionary spending.

The S&P 500 is set to rise toward its all-time high early next year, pullback midyear and then rally back toward the highs, according to strategists at Societe Generale SA.

“It (S&P 500) should be in ‘buy-the-dip’ territory, as leading indicators for profits continue to improve,” wrote Manish Kabra. “Yet, the journey to the end of the year should be far from smooth” he added, citing an economic downturn, a looming credit selloff, and ongoing quantitative tightening as hurdles traders still need to face.

To some market watchers, the S&P 500’s rally is looking increasingly unsustainable. Strategists tracked by Bloomberg predicted on average in mid-October that the gauge would end the year at 4,370 — but it is already been trading above 4,500.

To power back to its previous peak, the S&P 500 needs more than just the earnings recovery that appears to be underway — rate cuts are necessary, too. That’s according to Bloomberg Intelligence’s fair-value model of the US stock benchmark, which says the consensus 2024 price target on the gauge looks too lofty.

The typical post-earnings recession rebound is expected to come against a backdrop of sustained higher interest rates. That’s likely to limit potential upside for the S&P 500 to around levels the gauge is currently trading at, even in the best-case scenario, based on projections by BI equity strategists Gina Martin Adams and Michael Casper.

“The market as a whole has not yet eclipsed its early-2022 highs, reflecting the push and pull between optimism for a Fed-engineered soft landing and the potential underestimation of economic headwinds,” said Jason Pride and Michael Reynolds at Glenmede.

Meantime, some of Wall Street’s top strategists are divided when it comes to Corporate America’s earnings outlook next year. While Citigroup Inc.’s Scott Chronert expects profits to hold up even if the economy slips into a recession, JPMorgan Chase & Co. strategist Mislav Matejka says diminishing pricing power would crimp overall revenue and margins regardless of whether growth contracts.

A Citigroup index shows downgrades to US earnings estimates have outnumbered upgrades for nine weeks in a row — the longest streak since February. Chronert does expect analysts’ estimates for 2024 to drop in the coming quarter — but that would only lower the bar for companies, he said.

And as the dollar rally stalled, it will take some firm real-sector data to challenge the current dovish Fed narrative, according to Win Thin, global head of currency strategy at Brown Brothers Harriman & Co.

“The US economy continues to grow above trend even as the rest of the world slips into recession, while price pressures remain persistent enough that the Fed will not be able to cut rates as soon and by as much as the market thinks,” Thin noted. “That said, the dollar remains vulnerable until we see a shift in market sentiment and expectations.”

To Solita Marcelli at UBS Global Wealth Management, the dollar should remain stable in the first months of 2024 due to robust economic growth and high interest rates relative to the rest of the world.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US markets climb, bonds tumble after unexpected inflation slowdown; S&P 500 gains 2%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Stocks climbed while bond yields tumbled as an unexpected inflation slowdown bolstered bets the Federal Reserve’s aggressive hiking cycle is now over — and the next move will be a rate cut next year.

The S&P 500 rose nearly 2%, the most since April. Tesla Inc. led gains in megacaps and Nvidia Corp. rallied for a 10th straight session. Regional banks jumped almost 6%. The Nasdaq also had its best day since April, adding 2.4% overnight.

The Russell 2000 index of small-cap stocks added over 5%. Goldman Sachs Group Inc.’s basket of the most-shorted stocks beat the broader market in a sign some traders are preparing to cover bearish wagers. Two-year yields plunged over 20 basis points. The US dollar fell 1.2%.

While Wall Street’s rally could risk further easing of financial conditions — and ultimately complicate the Fed’s job — bets on a “pivot” next year have increased. Fed swaps indicate the odds of another hike have fallen to almost zero — with the market pricing in a 50 basis-point rate cut by July.

“The last of investors not convinced the Fed is done are likely ‘throwing in the towel’,” said Bryce Doty at Sit Fixed Income Advisors. “The next Fed action is more likely to be a cut next summer than another rate increase.”

Fed officials welcomed the latest data showing receding US inflation, while adding that there’s still a way to go before it reaches the central bank’s 2% target.

“Our base case remains that the Fed will not raise rates further,” said Brian Rose at UBS Global Wealth Management. “However, inflation is still too high and the labor market still too tight for the Fed to declare victory and announce an end to the rate-hiking cycle.”

Equities have rallied in November on bets the Fed is done with rate hikes, with the S&P 500 up more than 7% in the span — and heading toward its best month since October 2022.

In the past 22 years, when the S&P 500 was up 5% or more by mid-November, the remainder of that year was positive every single time, according to data compiled by Bloomberg. Go back 50 years, and that setup was positive 26 out of 30 times, with the decline in the four exceptions being 1% or less.

Investors turned the most bullish on bonds since the global financial crisis amid “big conviction” that rates will move lower in 2024, according to the latest Bank of America Corp. fund manager survey.

Pacific Investment Management Co. — among the many whose expectations for a rally this year were disappointed — is renewing the call for 2024.

Bonds “have rarely been as attractive as they appear today” relative to stocks, Pimco managers Erin Browne, Geraldine Sundstrom and Emmanuel Sharef said in a report predicting “prime time” for the asset class in 2024.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Wall Street bonuses may see no growth or a drop, says study

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bonuses for investment bankers advising companies on mergers and acquisitions are expected to drop by 15% to 25% this year from 2022, according to a study by Johnson Associates, a compensation consultant in New York.

Commercial and retail bankers at regional banks will receive bonuses that are 10% to 20% lower than the previous year, the report showed.

“Most Wall Street professionals will have to wait another year for a rebound,” said consultant Alan Johnson. “With the financial markets and overall economy struggling to find footing throughout the year, most business segments remain under pressure to keep compensation costs down.”

But there are some exceptions. Investment bankers working in equity underwriting are projected to receive payouts that are 5% to 15% higher than last year, while wealth managers could receive awards that are 5% higher. Retail or commercial bankers working in large institutions could see year-end bonuses stay flat or rise about 10%.

“Looking ahead, 2024 is unfortunately expected to be another challenging year,” as higher interest rates and geopolitical uncertainty restrain activity, the consultant wrote. “Headcount and staffing models are being evaluated” as turnover declines and companies divide smaller bonus pools based on performance.

Bonuses for debt underwriters are expected to stay flat or drop as much as 10%, while payouts for equity trading could fall 5% to 10%.

Finance professionals working in fixed-income trading, hedge funds, private equity firms and asset managers can expect flat bonuses or small gains or losses, according to the estimates.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow