Unexpectedly Intriguing!
13 May 2024
An editorial cartoon of a Wall Street bull riding a bicycle looking backwards at a bear chasing him. Generated with Microsoft Copilot Designer.

The S&P 500 (Index: SPX) rose a little over 1.8% largely as expectations the Federal Reserve will start a series of rate cuts in September 2023 firmed. The index closed out the trading week ending on Friday, 10 May 2024 at 5,222.68, just 0.6% below its 28 March 2024 record high.

Those expectations firmed despite the comments of Federal Reserve officials, whose pronouncements during the week were all over the map. Several see inflation running too high, prompting them to suggest they will continue to hold rates where they're at. Some are worried enough about inflation they're suggesting they would be okay with seeing economic growth slow and weaken. Others are saying they already see slowing growth, so they're looking ahead to having to cut rates to stimulate the economy, although they're unsure of their timing.

With that kind of shotgun spread from Fed officials about how they'll be setting monetary policy during 2024, investors continued focusing on September 2023 as the likely timing for when the Fed will start cutting U.S. interest rates. The CME Group's FedWatch Tool continued holding steady in anticipating the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% until 18 September (2024-Q3) for the fourth week in a row. For the second week in a row, the tool anticipates the Fed will start a series of 0.25% rate cuts on that date, which will proceed well into 2025 at 12-week intervals.

The latest update for the alternative futures chart shows the trajectory rejoining the dividend futures-based model's projections as expected, with investors focusing their foward-looking attention on 2024-Q3.

Alternative Futures - S&P 500 - 2024Q2 - Standard Model (m=+1.5 from 9 March 2023) - Snapshot on 10 May 2024

The market-moving headlines document the Fed officials' various statements and provide more context for the information investors absorbed during the week that was.

Monday, 6 May 2024
Tuesday, 7 May 2024
Wednesday, 8 May 2024
Thursday, 9 May 2024
Friday, 10 May 2024

The Atlanta Fed's GDPNow tool is projecting an annualized real GDP growth rate of +4.2% in 2024-Q2, sharply up from the previous week’s forecast for 3.3% growth.

Image credit: Microsoft Bing Image Creator. Prompt: "An editorial cartoon of a Wall Street bull riding a bicycle looking backwards at a bear chasing him".

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