Stock Market Update: Major Indexes Fall Over 1% as Fed Takes Cautious Approach
Stock Indexes Decline Amid Fed Caution
On Thursday, the three major U.S. stock indexes experienced drops of more than 1%, marking the largest daily percentage decline for the since February 13. The decline was triggered by cautious comments from Federal Reserve officials regarding the outlook for interest rate cuts. Additionally, investors were preparing for the release of the U.S. monthly jobs report scheduled for Friday.
Market Reaction to Geopolitical Tensions
Investors also reacted to U.S. President Joe Biden’s call for an immediate ceasefire in a conversation with Israel Prime Minister Benjamin Netanyahu regarding the ongoing conflict in Gaza. This led to an increase in oil prices due to heightened geopolitical tensions. All major S&P 500 sectors experienced declines, with technology leading the way with a 1.7% drop, while defense-related companies like Lockheed Martin (NYSE:) saw gains.
Fed Officials’ Cautious Stance
In statements made by Fed officials, Minneapolis Fed Bank President Neel Kashkari mentioned penciling in two rate cuts for this year during the central bank’s last meeting. However, he noted that if inflation remains sluggish, no rate cuts may be necessary. Richmond Fed President Thomas Barkin emphasized the need for clarity on inflation before considering rate cuts.
Market Outlook and Concerns
Analysts highlighted the careful and measured approach taken by the Fed, particularly in light of the upcoming jobs report on Friday. The Cboe Volatility index recorded its highest close since November 1, reflecting the market’s nervousness ahead of key data releases.
Jobs Data and Rate Cut Expectations
The decline in stock indexes followed an increase in jobless claims, which fueled expectations of rate cuts. The upcoming jobs data is expected to provide insights into the labor market and inflation trends. Economists predict a decrease in nonfarm payrolls for March, with the unemployment rate likely to remain stable.
Market Highlights and Closing Numbers
The Dow Jones Industrial Average fell by 530.16 points, the S&P 500 lost 64.28 points, and the dropped 228.38 points. The CME Group’s FedWatch tool indicates a 60% chance of a rate cut in June. Levi Strauss (NYSE:) saw a significant increase in shares after raising its profit forecast.
Market Performance Metrics
Trading volume on U.S. exchanges reached 11.99 billion shares. Declining issues outnumbered advancing ones on the NYSE and Nasdaq. The S&P 500 and Nasdaq Composite recorded new highs and lows, reflecting the overall market performance.
