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As April wraps up, the optimism that boosted last week's market excitement seems unlikely to continue. The US S&P500 index is still down by 2.94% for the month, showing that investors are still being cautious. In the bond market, many thinks there won't be any interest rate cuts in 2024, even though US prices are still going up despite lower-than-expected growth in the first quarter. The main reason growth wasn't as good as expected was because of trade, which shows how important the strength of the US dollar is. The dollar is still strong, especially compared to other currencies like Japan, Canada, and Europe, where buying things from the US seems cheaper because their money is worth less.
SP500 4H Chart
Even with these challenges, companies' profits in the first quarter haven't been hurt much by the strong dollar or slower growth. Surprisingly, about half of the big US companies have reported higher profits than people expected, which is the third time in a row this has happened. Last week, when US stock prices went up again, it didn't make the dollar weaker or make bonds more popular, which is strange. While April has been important for changing investments around, it's not expected to be as big as May or June.
Looking forward, everyone's waiting to see what the Federal Reserve does next, what the US government plans for borrowing money, and how many new jobs were made in the US. Other countries are mostly watching what happens in the US, rather than making big decisions themselves.
The main things people are thinking about this week are how interest rates affect things compared to problems in different parts of the world. Even though US interest rates are going up, stock prices around the world have been a bit better, which might mean that people are more worried about problems between countries, like what's happening in Israel and Iran. Also, people are worried about whether the US economy is growing as much as it should and how the strong dollar affects things. Even though the first quarter of the year wasn't as good for the US economy as people hoped, many are still optimistic about the future, especially if the US government and the Federal Reserve make good decisions. However, there's some uncertainty because of a saying that suggests selling stocks in May might be a good idea, which started earlier than usual this year, making people wonder what will happen next month.
FED Watch
Insights Inspired by BNY (Little Chances): Credit to Their Analysis for Shaping Some Aspects of This Text
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