Market Performance (Tuesday): $S&P 500(.SPX)$ : -1.1% $NASDAQ(.IXIC)$ : -1.7% Dow Jones: -260 points (-0.6%)
Despite better-than-expected housing and industrial production data, investor jitters ahead of the Fed meeting dragged markets lower. $Tesla Motors(TSLA)$ $Technology Select Sector SPDR Fund(XLK)$
1️⃣ US Labor Market Weakening
Labor market softness could impact consumer spending and economic growth.
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The US labor market is shifting from normalization to noticeable weakening: Job switchers vs. job stayers wage gap hit a 10-year low → Recessionary signal. Office occupancy at a post-pandemic high → More employees back at work could indicate a weaker labor market.
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Google searches for “ask for a raise” back to pre-pandemic levels → Less wage pressure.
2️⃣ Walmart’s Sharp Decline – A Recession Warning?
Walmart stock dropped 18.8% over 20 trading days – a rare event (+2 standard deviations). 🔹 Since 1972, similar declines have occurred 78% of the time in bear markets or recessions.
3️⃣ Fed’s Big Decision: What to Expect
FOMC
🏦 FOMC Policy Decision (Wednesday, 2 PM ET) : No rate change expected (current range: 4.25%-4.50%). Key focus: Fed’s economic outlook, rate cut expectations, and balance sheet plans.
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Scenarios: Baseline: Powell signals patience, keeping two rate cuts for 2025
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. Dovish shift: If economic concerns grow, Fed may signal three cuts.
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Quantitative Tightening (QT): Fed could slow its balance sheet runoff but not pause entirely.
4️⃣ Economic Data – Mixed Signals
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Stronger-than-expected data: Housing starts: +11.2% in February (1.5M annual rate, beating estimates). Industrial production: +0.7% MoM (vs. +0.2% expected).
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Weaker data: Atlanta Fed GDPNow Q1 forecast: Still negative (-1.8%), though improved from -2.4%. New York Fed GDP Nowcast: +2.7% growth → A big divergence from Atlanta’s model.
5️⃣ Tech Sell-Off: Nvidia and AI Hype Can’t Stop the Drop
New AI PC
$NVIDIA(NVDA)$ unveiled new AI chips, but the stock still fell -3.4%. Tech sector continues to struggle as investors question high valuations amid slowing earnings growth. Market sentiment toward tech remains shaky despite AI optimism. $Roundhill Magnificent Seven ETF(MAGS)$
$MGK
6️⃣ What’s Next?
Fed decision and Powell’s speech will dictate short-term market direction. Labor market trends and consumer spending remain key risks for growth. Tech stocks may stay under pressure if investors rotate into defensive sectors.
Markets remain volatile, with conflicting economic signals. Investors should stay cautious but watch for opportunities as the Fed provides more clarity…
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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.
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