Markets Try Ending Two Week Slip As Interest Rate Decision Looms

Key Takeaways

• Stocks Closed Lower For Second Consecutive Week
• Nvidia GTC Conference Kicks Off
• Federal Reserve Open Market Committee Meets

For the first time this year, stocks are coming off consecutive weeks of back-to-back losses. The S&P 500 ended down 0.72% on Friday while the Nasdaq Composite fell just under 1%. The S&P is sitting right at its 21-day moving average while the Nasdaq is just below it. With the Bank of Japan, Bank of England and our own Federal Reserve all set to meet this week, plus a handful of earnings scheduled for release, I’m interested to see if the past two weeks were just some profit taking or if the narrative has shifted.

Friday was a quadruple witching day and while we did close lower, market internals were actually pretty positive. Advancers outpaced declines and we had more positive volume overall than negative. In addition to that, the VIX was hardly changed. Much of the selling was really confined to some of the bigger names we’ve seen make runs this year. In fact, we’ve seen some of the strongest stocks take a breather recently. Companies such as ARM Holdings is down 23% from its recent high set in February. Marathon Digital is off 45% from its late February high. In addition to those names, companies like Tesla
TSLA
that are down 34% year-to-date.

Then there are stocks at the other end of the spectrum, like Nvidia. This week is Nvidia’s annual GTC conference. This event tends to be a time when Nvidia makes big announcements. The market is pricing in a 9% move for the week and the stock is already up 3% in premarket. Since the end of last year, Nvidia is up a staggering 77%.

Another interesting story in the Artificial Intelligence (AI) space involves Apple
AAPL
and Google
GOOG
. Apple is in talks with Google to use Google’s Gemini AI engine in the iPhone. While no details are expected to be announced before Apple Developer’s Conference this summer, this story caught my attention because I’m not sure if it’s a sign of just how far behind Apple has fallen in AI or if this is intended to be a temporary solution.

The big news this week though is the Federal Reserve Open Market Committee (FOMC) meeting scheduled for tomorrow and Wednesday. It’s a forgone conclusion that the Fed will leave rates unchanged this month; however, Jerome Powell will provide an updated outlook for the rest of the year. That outlook will include the number of cuts the FOMC anticipates making. As things currently stand, the Fed is not expected to make a cut to rates until at least June, according to the CME.

Also, this week we’ll get earnings on Thursday after the close from FedEx
FDX
, Lululemon and Nike
NKE
. For the year so far, FedEx is relatively unchanged. Lululemon is down 9% and Nike is down 8%.

Looking forward to today, stocks are strong in premarket. The S&P 500 futures are up 0.7% and the Nasdaq 100 futures are higher by 1.11%. The Bank of Japan is scheduled to make a decision on interest rates after the market closes today. Monetary policy enthusiasts are closely watching to see if the BOJ raises rates for the first time since 2007. A rate raise would likely be interpreted as a positive given the stagnant Japanese economy. As always, I would stick with your investing plan and long term objectives.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.