Stocks, bonds, oil, gold and the dollar made negligible moves on Monday, as investors continued to speculate on what the FED will announce at the next FOMC meeting. The Dow Jones index rose 6 points, the S&P rose 3 points, the Nasdaq rose 2 points, the Russell 2000 index fell 12 points and Transportation lost 86 points. Meanwhile, the 2-year bond yield rose to 5.05%, while the 10-year bond yield fell to 4.3%. Oil rose $1.40 or 1.5%, gold rose $9 and the dollar index fell 23 cents to close the day at $105.08.
As for the sectors, only Technology and Energy rose on Monday, while the other 9 sectors fell. The Real Estate sector led the decline with a decrease of 1.6% and the Consumer Discretionary Goods sector fell 1.3%. Consumer discretionary goods represent luxury goods and price elastic items.
The latest IPO, ARM, lost 4.5% by the end of the day, falling a total of 15.7% since its debut on the 14th. Although it is still up 15% overall, the initial excitement around the IPO seems to be fading away.
Apple tried to recover after losing 7.5% of its value after its Wunderlust event. Asset managers often use Apple as a store of value and can quickly liquidate a significant portion to raise cash when needed. For example, selling 1 million shares can raise $177 million. In comparison, selling the same amount in other stocks, such as Bank of Hawaii, is not feasible without significantly affecting the stock price.
Today begins the FOMC meeting, where Federal Reserve officials will discuss and debate their next moves. The futures market suggests that the first rate cut will occur in May 2024, but this prediction may be too ambitious considering possible additional rate increases in November and December. Other central banks, such as the Bank of Canada, the Reserve Bank of Australia, the Bank of England and the Bank of Japan, are expected to follow the Federal Reserve’s lead by keeping rates higher for longer to combat the inflation.
– FOMC: Federal Open Market Committee, the branch of the United States Federal Reserve responsible for setting monetary policy and interest rates.
– IPO: Initial Public Offering, the first sale of a company’s shares to the public.
– Dot Chart: A graph produced by the Federal Reserve that shows each participant’s expectations about future interest rate levels.
Sources: This article is based on information from several sources.