By
Steve Muchoki
April 16th, 2024
The US stock market tries to remain upbeat as fears of recession once again take the center stage. All eyes on the FOMC meeting ahead this week on Wednesday.
During the early trading hours on Monday, April 4, the US stock index futures were trading lower. This happens as the S&P 500 posted straight three weeks of gains during the trading ending last Friday.
US Stock Futures and Wider Market
As of press time, futures contracts tied to Dow Jones Industrial Average are down 52 points. Similarly, futures contracts tied to the S&P 500 were down 0.13% and the futures contracts tied to Nasdaq 100 were down 0.18%.
On Friday, stocks advanced at the beginning of the new month of April 2022. The market reacted positively on Friday following March’s employment report. As per reports, the US economy added 431,000 jobs during the month. But this was still less than the estimated number of 490,000. Peter Essele, head of portfolio management for Commonwealth Financial Network said:
“Strong gains on the employment front continue to signal a green light for investors despite multi-decade highs in inflation and concerns over higher rates and Fed tightening. The economy appears to be in exit velocity mode, with the only concern being the amount of labor supply available to fuel the robust recovery”.
Recession Signals Triggered?
There has been a lot of talk about the US economy heading towards a recession. On Thursday, the recession signals were triggered for the first time wherein the 2-year and 10-year Treasury yields inverted for the first time since 2019. In a note to clients, TD Securities said:
“We think the current flattening is due to the concern that the Fed is behind the curve on hikes and will tighten policy beyond neutral, which will hurt growth”.
On the other hand, investors have been monitoring the latest developments in Ukraine. On Sunday, April 3, the German chancellor Olaf Scholz said that Western nations will continue to impose additional sanctions on Russia in the coming days.
“Equity and bond markets continued to send conflicting signals about the economic outlook. We caution against over-interpreting either signal. Yield curve inversions have historically predicted recessions with a long and uncertain lag, while hopes over cease-fire talks have ebbed and flowed,” UBS told its clients, speaking on this matter.
Everyone is carefully watching the Fed actions ahead this year. This Wednesday, the US central bank Federal Reserve will give investors a better understanding of it views market conditions.