In his Daily Market Notes report to investors, Louis Navellier wrote:
Rates lower, stocks higher. Powell testifies to Congress this week.
Stocks continued their rally since rates broke last Thursday. The 10-year dropped below 3.9% pre-market but ran back to 3.94% after the open, but it didn’t stop the market from continuing to rise. The 2-year bottomed at 4.82% and has since bounced back to 4.85%. It was time for a rebound after a very tough February.
The US dollar index has fallen back to 104.25 after almost hitting 105 last week. The S&P is headed back to 4,100 and the NASDAQ to 11,900.
Growth Amidst Rate Hikes
Mid-single-digit inflation is not a problem for the economy to continue to grow, it's only a problem for the Fed's 2% target. That remains the tension in the market that won't be released until the Fed announces they are done increasing the overnight Fed funds rate.
Hopes for a quick reversal to rate cuts after a pause seem to be wishful thinking unless inflation goes down dramatically, which historically takes a significant recession and that remains unlikely with such a strong employment picture.
Today, we're seeing the more speculative sectors trading up strongly on lower interest rates, including most names claiming to have an angle on AI (Artificial Intelligence). Energy names are taking heat on a big drop in natural gas, down 14% on the day, back down to $2.58 after breaking above $3 on Friday, having dropped over 60% between early December and late February. Crude oil remains near $80.
In a bit of a surprise, China set 5% as its growth target, below most forecasts, and is taking the wind out of the sails of the commodities they buy most of.
All Eyes on Powell
Tomorrow, Jay Powell testifies to the Senate Banking Committee, and on Wednesday to the House Financial Services panel. His words will be closely followed for any indication of the possibility of a 50 bps increase this month. On Friday, we get jobs numbers and more inflation numbers next week.
The VIX remains below 19 reflecting growing confidence that growth is still possible under the Fed's plans for rate increases.
Less than 12 hours after she scored an $11,000 jackpot at a casino, a Maryland woman scored a $100,000 prize from a scratch-off lottery ticket.
The winner, a certified nursing assistant, said some of her money will go toward visiting her son in China, and some will go into advancing her career. Source: UPI. See the full story here.