We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Pre-market futures are up this morning. There is no real news on which market opinion to pivot, but slightly bullish sentiment looks to be gathering ahead of tomorrow’s Consumer Price Index (CPI) report, which is expected to come in +3.5% on the Inflation Rate (headline CPI year over year) and +3.7% on core CPI year over year. Last week’s Jobs Report was stronger than expected, so sandwiched in between these two major economic metrics, investors apparently feel pretty good about where they are.
We’re only a week and a half into a new trading quarter. The pullbacks we’ve seen — not unexpected, by the way, with +10% gains on the Nasdaq and S&P 500 in Q1 — have amounted to -2% on the Dow and small-cap Russell 2000. Thus, flowing forward by +45 points on the Dow, +13 on the S&P and +67 points on the Nasdaq as of right now. Over the last month, the Dow is +0.89%, the Russell +1.46%, the Nasdaq +2.18% and the S&P, which leads all major indices over that time period, is +2.80%.
While CPI data is the big report tomorrow, it’s not the only one. We also get a look at the minutes of the latest Federal Open Market Committee (FOMC) meeting from last month, which paused for the fifth straight meeting from making a move on interest rates. The current range of +5.25-5.50%, arrived at last July, is now the highest rate in more than 23 years, when the tech bubble was beginning to prove unstable. But we don’t see similar weaknesses in the economy presently.
Are valuations for A.I.-related stocks high? You bet they are. Yet without knowledge of foresight, there’s no way to tell how high these stocks can go, nor whether valuations for these companies will be demonstrably higher for the foreseeable future. This is a good place to be for our economy — perhaps not in terms of interest rates and inflation, but in terms of productivity and potential. Of course, this may delay plans to return ourselves to optimum +2% inflation rates, currently expected to arrive next year.
To the Fed’s credit, they have not overplayed their hand. While notably late to the party in terms of jacking up rates to cool inflamed inflation levels just over two years ago, the monetary policy body moved swiftly but not erratically to bring us our current high levels. They are now discussing rate cuts, not for the next Fed meeting on April 30/May 1, but for the one after that. We should be able to see in today’s Fed minutes if anyone is getting cold feet regarding that timeline.
Aside from higher interest rates, another salve for inflation is productivity. The latest U.S. government investment in infrastructure manifested itself this morning, with the announcement that Taiwan Semiconductor (TSM - Free Report) is taking part of the $6.8 billion allotted in the Chips Act to build the first of its U.S.-based fabrication plants for microchips. Aside from moving a chess piece that would keep any future Chinese invasion of the island of Taiwan from almost completely annexing semiconductor manufacturing, this plant also promises plenty of good-paying tech jobs.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Overview of Current Market Conditions
Pre-market futures are up this morning. There is no real news on which market opinion to pivot, but slightly bullish sentiment looks to be gathering ahead of tomorrow’s Consumer Price Index (CPI) report, which is expected to come in +3.5% on the Inflation Rate (headline CPI year over year) and +3.7% on core CPI year over year. Last week’s Jobs Report was stronger than expected, so sandwiched in between these two major economic metrics, investors apparently feel pretty good about where they are.
We’re only a week and a half into a new trading quarter. The pullbacks we’ve seen — not unexpected, by the way, with +10% gains on the Nasdaq and S&P 500 in Q1 — have amounted to -2% on the Dow and small-cap Russell 2000. Thus, flowing forward by +45 points on the Dow, +13 on the S&P and +67 points on the Nasdaq as of right now. Over the last month, the Dow is +0.89%, the Russell +1.46%, the Nasdaq +2.18% and the S&P, which leads all major indices over that time period, is +2.80%.
While CPI data is the big report tomorrow, it’s not the only one. We also get a look at the minutes of the latest Federal Open Market Committee (FOMC) meeting from last month, which paused for the fifth straight meeting from making a move on interest rates. The current range of +5.25-5.50%, arrived at last July, is now the highest rate in more than 23 years, when the tech bubble was beginning to prove unstable. But we don’t see similar weaknesses in the economy presently.
Are valuations for A.I.-related stocks high? You bet they are. Yet without knowledge of foresight, there’s no way to tell how high these stocks can go, nor whether valuations for these companies will be demonstrably higher for the foreseeable future. This is a good place to be for our economy — perhaps not in terms of interest rates and inflation, but in terms of productivity and potential. Of course, this may delay plans to return ourselves to optimum +2% inflation rates, currently expected to arrive next year.
To the Fed’s credit, they have not overplayed their hand. While notably late to the party in terms of jacking up rates to cool inflamed inflation levels just over two years ago, the monetary policy body moved swiftly but not erratically to bring us our current high levels. They are now discussing rate cuts, not for the next Fed meeting on April 30/May 1, but for the one after that. We should be able to see in today’s Fed minutes if anyone is getting cold feet regarding that timeline.
Aside from higher interest rates, another salve for inflation is productivity. The latest U.S. government investment in infrastructure manifested itself this morning, with the announcement that Taiwan Semiconductor (TSM - Free Report) is taking part of the $6.8 billion allotted in the Chips Act to build the first of its U.S.-based fabrication plants for microchips. Aside from moving a chess piece that would keep any future Chinese invasion of the island of Taiwan from almost completely annexing semiconductor manufacturing, this plant also promises plenty of good-paying tech jobs.