Unexpectedly Intriguing!
15 April 2024
An editorial cartoon of a Federal Reserve official trying to pull down a sign while a disappointed bull watches. Generated with Microsoft Copilot Designer.

The repercussions of delayed rate cuts continued to shake out in the U.S. stock market in the past week. Overall, the S&P 500 (Index: SPX) dropped a little over 1.5% from where it ended the previous week to close at 5,123.41 on Friday, 12 April 2024.

Most of that decline came on Friday. Bad news came in the form of diminished earning expectations for big U.S. banks, whose previous outlook had counted on the Federal Reserve delivering rate cuts starting before the end of 2024-Q2.

Speaking of which, with the change in outlook for rate cuts, the CME Group's FedWatch Tool now projects the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% until 31 July 2024. The tool also projects just two rate cuts in 2024, one on 31 July (2024-Q3), the other in December (2024-Q4). And a first rate cut on 31 July 2024 is looking shaky.

We've rolled the alternative futures chart forward to show the dividend futures-based model's projections for the S&P 500 through the second quarter of 2024.

Alternative Futures - S&P 500 - 2024Q2 - Standard Model (m=+1.5 from 9 March 2023) - Snapshot on 12 Apr 2024

We find the actual trajectory of the S&P 500 running below the model's projections, with the deviation taking place entirely during the past week. Right now, it's too early to tell if that's a consequence of a regime change in the market, which is on the table because of the change in expectations for the Fed's rate cuts. A regime change would mean the dividend futures-based model's multiplier has itself changed from the value of +1.5 it has mostly held since 9 March 2023. We'll be able to make that determination within the next few weeks.

In the meantime, here are the market-moving headlines from the week that was.

Monday, 8 April 2024
Tuesday, 9 April 2024
Wednesday, 10 April 2024
Thursday, 11 April 2024
Friday, 12 April 2024

Any effect on stock prices from Iran's attack on Israel from territory it controls in Iraq over the weekend will be seen in the week ahead.

The Atlanta Fed's GDPNow tool's latest estimate of real GDP growth for the first quarter of 2024 (2024-Q1) ticked down to +2.4% from the +2.5% growth forecast last week.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Federal Reserve official trying to pull down a sign while a disappointed bull watches"

Labels: ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations

Thanks in advance!

Recent Posts

Indices, Futures, and Bonds

Closing values for previous trading day.

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button


The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Useful Election Data
Charities We Support
Shopping Guides
Recommended Reading
Recently Shopped

Seeking Alpha Certified