By
Temitope Olatunji
April 26th, 2024
The Dow has hit a new record, while other indexes also increased, as traders believe the Fed will leave interest rates unchanged.
The Dow Jones Industrial Average (DIJA) rose 0.36%, adding more than 138 points to close at 38,001.81, a new all-time record. This is the first time the index tracking US blue-chip companies has hit the 38,000 mark. There also were increases in the S&P 500, which hit 4,850.43 after climbing 0.22%, and the Nasdaq Composite’s 0.32% rise to 15,360.29. The S&P’s close is also a new record.
Mixed Stock Movements
Several companies rose while some dipped, resulting in mixed movements across the stock market. For instance, inverter system and smart device company SolarEdge Technologies rose 4%. Interestingly, the company’s climb came after it announced it would lay off 16% of its global workforce, affecting about 900 staff members. According to CEO Zvi Lando, the “very difficult but necessary decision” is required “to align our cost structure with the rapidly changing market dynamics”.
In addition to SolarEdge Technologies, department store chain Macy’s climbed over 3% on news it turned down a $5.8 billion offer from Arkhouse Management and Brigade Capital Management to go private. The two investment firms tried to offer Macy’s a chance to sell as the company is struggling to outperform its competition. However, a Macy’s statement noted that the holding company did not find the offer attractive enough. Interestingly, Macy’s announced last week, its decision to streamline its operations. The company is closing a few stores and cutting 2,350 jobs.
On the other hand, firms like B Riley Financial fell 2.5% after news about an investigation into possible connections to securities fraud. According to a Bloomberg report, the United States Securities and Exchange Commission (SEC) is looking into dealings with Brian Kahn, the Chief Executive Officer of Franchise Group Inc.
Fed Rates
The direction of the economy at this point seems a bit uncertain. Regardless, the CME Group’s FedWatch Tool notes that traders have priced in a 42.4% chance that the Federal Reserve (Fed) will cut interest rates in March. The likelihood that the apex bank will keep rates unchanged jumped from 19% last week, to the current 56.5%. For the January meeting, traders priced in a 2.6% chance of a rate cut, and a 97.4% chance that the Fed will leave rates in the 5.25-5.5% interest rate.
Unfortunately, there is a possibility that tech stocks may face some heat after waxing strong for two weeks. According to BTIG’s Managing Director and Chief Market Technician, Jonathan Krinsky, “we have some potentially important green-to-red downside reversals in some tech names.” Adding that the market should expect “downside shakeouts”. Krinsky said:
“Mega-cap tech and semis are stalling out here as they show upside exhaustion signals.”
In the crypto sector, Bitcoin’s plunge below $40,000 shows possible risk in the industry, despite the recent approval of spot ETFs. The market volatility has resulted in heavy liquidations in leverage positions, crossing $157 million. Coinglass data shows that most of the liquidations were long positions, worth about $134 million. Short positions accounted for $22 million.
